In an Outsourcing Decision, the General Rule Managers Should Follow

question 60

Multiple Choice

In an outsourcing decision, the general rule managers should follow is to:

• A) Choose the option with the lowest relevant cost
• B) Maximize the use of constrained resources
• C) Outsource if the price is greater than the sum of variable costs and fixed costs
• D) Do not outsource if the cost is less than the sum of relevant fixed costs and opportunity costs

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Definitions:

Annual Straight-Line Depreciation

A method of calculating the depreciation of an asset, spreading its cost evenly over its useful life.

Straight-Line Depreciation Rate

A method of calculating the depreciation of an asset, where the asset's cost is evenly distributed over its useful life.

Useful Life

The estimated duration an asset is expected to be economically usable, with normal wear and tear.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing the asset's wear and tear, deterioration, or obsolescence.