10.00 points Problem 10-2 An online retailer must decide if it should insource o

Question

10.00 points Problem 10-2 An online retailer must decide if it should insource or outsource its Web site maintenance. The company estimates that 4,400 hours per year will be needed to maintain its Web site. To insource maintenance requires $38,000 in fixed costs per year and $25/hour in variable costs. Quotes from suppliers show that Web site maintenance can be outsourced for $37 per hour a. Compute the total annual cost for insourcing and outsourcing the maintenance Total Cost Insource per yea Outsource per year b. Which option would you prefer? O Outsource O Insource

Explanation / Answer

a) Maintainance hour required (H) = 4400 per year

For insource

For outsource

b) Insource option should be preffered as it has a lower total cost than outsource

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