When Break-Even Analysis Is Applied to an Outsourcing Decision, the Breakeven

question 48

Multiple Choice

When break-even analysis is applied to an outsourcing decision, the breakeven quantity is

• A)the ratio of fixed costs to the difference between variable outsourcing cost and variable in-house production cost
• B)the ratio of the difference between variable outsourcing cost and variable in-house production cost to fixed costs
• C)the product of the variable costs times the fixed costs
• D)the product of the variable costs times the production quantity

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Definitions:

Pollution Reduction

The process of decreasing or eliminating the release of pollutants into the environment, typically involving regulations and technologies aimed at clean air, water, and soil.

Minimum Cost

The lowest possible expense at which a company can produce a good or service without sacrificing quality.

Efficient Amount

The quantity of a good or service that maximizes social welfare, where marginal benefits equal marginal costs.

Socially Optimum

The most desirable level of output or activity from a societal perspective, balancing costs and benefits to achieve maximum social welfare.