How Does Outsourcing Improve an Organization's Utilization of Assets

question 92

Multiple Choice

How does outsourcing improve an organization's utilization of assets?

• A) by allowing a company to completely eliminate its IS department, which will reduce its payroll costs
• B) by allowing the company to sell assets to outsourcers and improve their cash position
• C) by eliminating the expense of keeping up with the latest technology and, thus, eliminate the drain on cash reserves
• D) Both B and C above are correct.

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Definitions:

Cost of Goods Manufactured

The total production cost (materials, labor, and overhead) of goods completed and ready for sale during a specific period.

Direct Labor

The wages paid to workers who are directly involved in the production of goods or in providing services.

Direct Materials

Raw materials that can be directly attributed to the production of specific goods or services in the manufacturing process.

Factory Utilities

The cost of services such as electricity, water, and gas used in the manufacturing process.