Question

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.

Answer 1

a. Break-even analysis can be used to provide insight into outsourcing decisions.

Step-by-step explanation:

Break-even analysis can provide an important insights on the cost and benefits into outsourcing decisions.

The simplest outsourcing decision is a single supplier versus multiple suppliers. Incorrect option. It can be trivial and depends on the kind of business company is in.

If a company decides to make a part in-house, it does not incur any fixed costs. Incorrect. There is a fixed cost for the company.

If a company outsources its work to external supplier, the variable cost per unit will be low. Incorrect. The variable cost per unit will be higher.

Break-even analysis can be used to provide insight into outsourcing decisions (Correct option).