Which of the following statements is true of outsourcing decisions
A) Break-even analysis can be used to provide insight into outsourcing decisions.
B) The simplest outsourcing decision is a single supplier versus multiple suppliers.
C) If a company decides to make a part in-house, it does not incur any fixed costs.
D) If a company outsources its work to external supplier, the variable cost per unit will be low.

Question

Quizplus · Accepted Answer

Break-even analysis can help determine the cost-effectiveness of outsourcing versus in-house production. The other options are incorrect. B is incorrect because there are many types of outsourcing decisions beyond single versus multiple suppliers. C is incorrect because in-house production incurs fixed costs such as equipment maintenance and facility expenses. D is incorrect because the variable cost per unit will depend on the specific outsourcing agreement and may not necessarily be low.

Which of the Following Statements Is True of Outsourcing Decisions