Question: You are deciding whether or not to outsource the designing activity necessary for the realization of a product. The activity is currently being run

You are deciding whether or not to outsource the designing activity necessary

You are deciding whether or not to outsource the designing activity necessary for the realization of a product. The activity is currently being run in-house by 5 designers providing a production capacity of 800 hours per month. The fixed monthly cost of the activity is $15,850, while the variable costs (related to the material used for drawing) are $1.25 per hour. You can buy the same quality of technical drawings on the market for an average of $24 per hour. REQUIRED: Calculate the capacity utilization rate that makes the two solutions indifferent.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!