The Pitt Corporation Has Been Outsourcing Data Processing in the Belief

question 110

Essay

The Pitt Corporation has been outsourcing data processing in the belief that such outsourcing would reduce costs and increase corporate profitability. In spite of this, there has been no meaningful increase in corporate profitability.
Previously, Pitt used a single-rate method to allocate data processing costs. A per unit cost for data processing was computed and compared to the price of the outside supplier. The price of the outside supplier was lower and thus, the outside bid was accepted.
Required:
Formulate a possible reason why Pitt's profitability has not shown improvement in terms of the cost allocation method used.

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Definitions:

Nonverbal Expressive Behavior

Communication without words through gestures, facial expressions, posture, and other physical behaviors.

Intellectual Stimulation

The encouragement of creativity, critical thinking, and problem-solving among followers by a leader, fostering innovation and learning.

Creative Solutions

Innovative and effective responses or approaches to solving problems, characterized by novelty and appropriateness.

New Perspective

A fresh or innovative way of viewing or thinking about something, often leading to different conclusions or approaches.