Problem 10-2 (Algo) An online retailer must decide if it should insource or outsource its Website maintenance. The company estimates that 3,400 hours per year will be needed to maintain its Website. To insource maintenance requires $33,000 in fixed costs per year and $25/hour in variable costs. Quotes from suppliers show that Website maintenance can be outsourced for $32 per hour. a. Compute the total annual cost for insourcing and outsourcing the maintenance. Insource Outsource Total Cost per year per year b. Which option would you prefer? O Insource O Outsource
Problem 10-2 (Algo) An online retailer must decide if it should insource or outsource its Website maintenance. The company estimates that 3,400 hours per year will be needed to maintain its Website. To insource maintenance requires $33,000 in fixed costs per year and $25/hour in variable costs. Quotes from suppliers show that Website maintenance can be outsourced for $32 per hour. a. Compute the total annual cost for insourcing and outsourcing the maintenance. Insource Outsource Total Cost per year per year b. Which option would you prefer? O Insource O Outsource
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:Problem 10-2 (Algo)
An online retailer must decide if it should insource or outsource its Website maintenance. The company estimates that 3,400 hours per
year will be needed to maintain its Website. To insource maintenance requires $33,000 in fixed costs per year and $25/hour in
variable costs. Quotes from suppliers show that Website maintenance can be outsourced for $32 per hour.
a. Compute the total annual cost for insourcing and outsourcing the maintenance.
Insource
Outsource
Total Cost
O Insource
O Outsource
per year
per year
b. Which option would you prefer?
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