(CMA)Hillary Corporation Has Its Own Cafeteria with the Following Annual

question 70

Multiple Choice

(CMA) Hillary Corporation has its own cafeteria with the following annual costs: Food $200,000
Labour 150,000
Overhead 220,000
Total $575,000
The overhead is 40% fixed. Of the fixed overhead, $50,000 is the salary of the cafeteria supervisor. The remainder of the fixed overhead has been allocated from total company overhead. Assuming the cafeteria supervisor will remain and that Hillary will continue to pay her salary, the maximum cost Hillary is willing to pay an outside firm to replace the cafeteria services is:

• A)$575,000
• B)$350,000
• C)$438,000
• D)$482,000

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