Question: 2. A hospital is evaluating whether to outsource or perform in-house a large set of blood and urine laboratory tests. The fixed cost of the

2. A hospital is evaluating whether to outsource or perform in-house a large set of blood and urine laboratory tests. The fixed cost of the laboratory located in the hospital is $800,000 and the weighted average variable cost per test if performed in-house is $28.75. A third-party lab located one city block from the hospital will perform the same tests and distribute the results electronically to the hospital at a price of $32.00. If the annual volume last year was 250,000 tests, should the hospital outsource or make-in-house?

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