Final answer:
A useful tool to determine where costs can be reduced or which activities should be outsourced is a Cost Benefit Analysis. This analysis involves weighing the marginal costs against the marginal benefits to make a decision.
Step-by-step explanation:
A useful tool to determine where costs can be reduced or which activities should be outsourced is a Cost Benefit Analysis. This analysis involves weighing the marginal costs (the extra cost of adding an additional unit) against the marginal benefits (the extra benefit of adding the same unit) to make a decision.
One way to conduct a Cost Benefit Analysis is by using a T-shaped chart where costs are listed on one side and benefits are listed on the other side. Costs represent what is given up in terms of money, effort, and sacrifices, while benefits represent what is gained from a decision in terms of money, time, experience, and improvements.
By comparing the costs and benefits, it becomes easier to identify areas where costs can be reduced or activities that can be outsourced to save money.