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Assume that Ace Aifirses currently malntains an alrcraft maintenance center om the west coast. All alscraft are periodically routed to the center for engine maintenance. Ace is evaluating a propesal to outsource engine maintenance to a third-party secvice provider. Review each of the follewing facts, and use the pick-list associated with osch boxed ares to ineficate whether the fact is relevant to the outseureing decision. A correct reply wis fum the boxed area green and populate the analysis colutins with applicable vatues (when apprepriate). FACY 2 - ouroct laber reductiod Der year via werkerew redocbon. FACT 3 - Mechinery and tooting Acese machintry and foolling in being depeeciated ever tive yoarc. Ef the engine arrving in outseurced, the equipment with be ided. It has nowhage ralue We thin fact relevant to the analysis? > - FACT 4 - Ficilites Ace owns in wervice hangers at the wout coast location, and anticipates being able so lease then to ochers for 5200,060 per year, it the minintenance activitios are butsourted. Is this fact televant to the analysis? >ass. FACT 5 - Transpertation If the englhe serving is outsoursed. Ace will no longer twed to ny all alrcralt to the west coast for cerving. The third-party service provider has multiple cenverient service centers around the country. This well generate anmial fuel and operating savinge of 1235604 lis thie fact rolewant to the analy oid 7 moxp FACT is - Traneportatise Ace has been receiving a waiver of $400,000 in property taxes on its west coast service hangers in exchange for employing more than 10 persons. That walver will be lost if the maintenance service is outsourced. The tenant that is expected to lease the hangers will be responsible for paying the property taxes, Is this fact relevant to the analysis? >>>> Shouid the service activity be outsourced? >>>> If the engine serving is outsourced Ace will no longer need to fly all aircraft to the west coast for serving. This will resuit in a reduction of downtime thereby allowing more revenue-generating flights. The contribution margin associated with the added flights is $750,000. Is this fact relevant to the analysis? Maybe Yes No Depends on managment predicted cash flow Question 2 1 pts Ace has been receiving a waiver of $400,000 in property taxes on its west coast service hangers in exchange for employing more than 10 persons. That waiver will be lost if the maintenance service is outsourced. The tenant that is expected to lease the hangers will be responsible for paying the property taxes. Is this fact relevant to the analysis? Depends on Cash Flow Sometimes NO Yes If the engine serving is outsourced, Ace will reduce direct labor by $2,500.000 per year via workforce reduction, Is this fact relevant to the analysis? No Probably Sometimes Yes Question 4 Ace's machinery and tooling is being depreciated over five years. If the engine serving is outsourced, the equipment will be idled. It has no salvage value. Is this fact relevant for analysis? Depends on the Cash Flow Yes Maybe No Ace owns its service hangers at the west coast location and anticipates being able to lease them to others for $250.000 per year if the maintenance activities are outsourced. This fact is relevant for analysis! True False Question 6 If the engine serving is outsourced, Ace will no longer need to fly all aircraft to the west coast for serving. The third-party service provider has multiple convenient service centers around the country. This will generate annual fuel and operating savings of $235,000. This fact is not relevant for the analysis. True False If the engine serving is outsourced, Ace will no longer need to fly all aircraft to the west coast for serving. This will result in a reduction of downtime, thereby allowing more revenue-generating flights. The contribution margin associated with the added flights is $750,000 which is relevant to the analysis and it creates $750,000 of additional income. True False Question 8 The net benefit (cost) of outsourcing is: Assume that Ace Airlines currently maintains an aircraft maintenance center on the west coast. All aircraft are periodically routed to the center for engine maintenance. Ace is evaluating a proposal to outsource engine maintenance to a third-party service provider. Review each of the following facts, and use the pick-list associated with each boxed area to indicate whether the fact is relevant to the outsourcing decision. A correct reply will turn the boxed area green and populate the analysis columns with applicable values (when appropriate). FACT 1. Contract sorvice cost Outsource Impact If the engine serving is outsourced, Ace will incur charges of $40,000 per service event. Each of Ace's 45 planes will require 2 service events per year. Is this fact relevant to the analysis? mmon FACT 2 - Direct labor reduction If the engine serving is outsourced, Ace will reduce direct labor by $2,500,000 per year via workforce reduction. Is this fact relevant to the analysis? >mos FACT 3 - Machinery and tooling Ace's machinery and tooling is being depreciated over five years. \& the engla serving is cutsourced, the equipment will be idled. Is has no safvage value. Is this fact relevant to the analysis? >> FACT 4 - Faclities Ace owns its service hangera at the west coast iocation, and anticipates belng able to lease them 50 others for $250,000 per year, if the maintenance activities are outsourced. Is this fact relevant to the analysis? >sas FACT 5 - Transportation If the engine serving is outsourced, Ace will no lonjer need to fy all alrcraft to the west coast for serving. The third-party service provider has multiple corterenient service centers around the country. This will generate annual tuel and operating savings of $235,000. Is this fact relevant to the analysis? >>> FACT 6 - Transportation If the engine serving is outsourced, Ace will na longer need to fly all aircraft to the west coast for serving. This will result in a reduction of downtime, thereby allowing more revenue generating flights. The contribution margin assoicated with the added flights is $750,000. Ace's machinery and tooling is being depreciated over five years. If the engine serving is outsourced, the equipment will be idled. It has no salvage value. Is this fact relevant to the analysis? FACT 4 - Facilities Ace owns its service hangers at the west coast location, and anticipates being able to lease them to others for $250,000 per year, If the maintenance aetivities are outsourced. Is this fact relevant to the analysis? >> FACT 5 - Transportation If the engine serving is outsourced, Ace will no longer need to fly all aircraft to the west coast for serving. The third-party service provider has multiple convenient service centers around the country. This will generate annual fuel and operating savings of $235,000. is this fact relevant to the analysis? >> FACT 6 - Transportation If the engine serving is outsourced, Ace will no longer need to fly all alreraft to the west coast for serving. This will result in a reduction of down-time, thereby allowing more revenue generating fights. The contribution margin assolcated with the added flights is $750,000. Is this fact relevant to the analysis? > FACT 7 - Property taxes Ace has been receiving a walver of $400,000 in property taxes on its west coast service hangers in exchange for employing more than 10 persons. That waiver will be lost if the maintenance service is outsourced. The tenant that is expected to lease the hangers will be responsible for paying the property taxes. Is this fact relevant to the analysis? > Net bentfit (cont of outsoureling >>>> Should the service activity be outsourced? >>> If the engine serving is outsourced, Ace will no longer need to fly all aircraft to the west coast for serving. This will result in a reduction of downtime, thereby allowing more revenue-generating flights: The contribution margin associated with the added fights is $750.000. is this fact relevant to the analysis? Maybe Yes No Depends on managment predicted cash flow Question 2 Ace has been receiving a waiver of $400.000 in property taxes on its west coast service hangers in exchange for employing more than 10 persons. That waiver will be lost if the maintenance service is outsourced. The tenant that is expected to lease the hangers will be responsible for paying the property taxes. Is this fact relevant to the analysis? Depends on Cash Fiow Sometimes No Yes If the engine serving is outsourced, Ace will reduce direct labor by $2,500,000 per year via workforce reduction. Is this fact relevant to the analysis? Probably Sometimes Yes Question 4 1 pts Ace's machinery and tooling is being depreciated over five years. If the engine serving is outsourced, the equipment will be idled. It has no salvage value. Is this fact relevant for analysis? Depends on the Cash Flow Yes Maybe No Ace owns its service hangers at the west coast location and anticipates being able to lease them to others for $250,000 per year if the maintenance activities are outsourced. This fact is relevant for analysis! True False Question 6 If the engine serving is outsourced, Ace will no longer need to fly all aircraft to the west coast for serving. The third-party service provider has multiple convenient service centers around the country. This will generate annual fuel and operating savings of $235,000. This fact is not relevant for the analysis. True False If the engine serving is outsourced, Ace will no longer need to fly all aircraft to the west coast for serving. This will result in a reduction of downtime, thereby allowing more revenue-generating flights. The contribution margin associated with the added flights is $750.000 which is relevant to the analysis and it creates $750,000 of additional income. True False Question 8 The net benefit (cost) of outsourcing is

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