A Local Accounting Firm Has Offered to Do All the Billings

Essay

A local accounting firm has offered to do all the billings and collections of a general practitioner.The annual fee will be $12,000.The service will replace the part-time bookkeeper who works for $12 an hour, 10 hours a week.Because outsourcing accounting activities will take place away from the office, the doctor estimates that she will have one additional hour a week to see patients.Normally she sees four patients an hour with an average visit fee of $100.The office is open 50 weeks a year.Since the accounting service will maintain all records in its office, the doctor will no longer need to rent storage space for the office files.The storage space rents for $150 a month.Required:Determine whether or not the doctor should accept the offer to use the accounting service.