Millbridge Ambulance Service (MAS) should not go ahead with consolidating its three locations into two because it will have a negative cost savings of $5,000.
Cost savings refer to the benefits that Millbridge can realize from some actions that reduce its expenses or costs.
Cost savings are derived from cost minimization strategies.
Salaries of staff = $80,000
Rent = $20,000
Repairs/Maintenance = $10,000
General /Administration = $20,000
Supplies = $25,000
Total = $155,000
Loss of state subsidy = -$40,000
Rent = $20,000
Repairs/Maintenance = $10,000
Supplies = $5,000 ($25,000 - $20,000)
Total savings = -$5,000
Thus, Millbridge Ambulance Service (MAS) should not go ahead with consolidating its three locations into two because it will have a negative cost savings of $5,000.
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