Millbridge Ambulance Service has been considering consolidating their three locations into just 2 locations. The location they are considering closing currently costs $155,000 to operate. If the location is closed, the ambulances from that location would be moved to the other two locations. The savings from the closure would be partially offset by increased expenses at the 2 remaining locations. Millbridge will lose $40,000 of state subsidy if they close the location. They only want to close the location if the closure results in an overall financial improvement. the current costs of the location are as follows:
Salaries of staff- $80,000
Rent- $20,000
Repairs/Maintenance$10,000
General/Administ- $20,000
Supplies- $25,000
Total- $155,000
The general and administrative expenses of $20,000 are an allocation of costs from the central office. The costs of the central office are not affected by the existence of a specific locations. If the locations is closed, the staff would be transferred to the other 2 locations and then lease will be cancelled, so there will be no rent or repairs and maintenance. While they wont purchase supplies for this location, the supply cost of the other 2 locations will rise by 20,000.
What should Millbridge do?