Calculate the total cost of outsourcing at Universal Studios Hollywood The Universal Studios Company is considering using their 3D printer to produce a new camera part to be used globally across the movie industry in-house, or outsourcing it to a local supplier. An outside supplier has bid on the part and will provide it for R1 000 each based on the production of 100 000 units each year with a three-year contract. In addition, the part will be transported to the Universal Studios facilities at a cost of R45,00 each, inventory carrying costs will be R30,00 per unit and contract administrative costs will be R10 000,00 per month. The new camera part can be produced in house if a new machine is purchased. The cost will be R40 000 000,00 to buy the new machine that is mortised over the three years of the contract. The direct labour cost is R20,10 each including benefits, the indirect labor is R7,50 each, and the materials cost R140,00 each. Calculate the total cost of outsourcing in the example above using the table below to present your findings. Once you have done so, explain from your perspective whether or not you would outsource the production or keep the production in-house and motivate why you have come to this conclusion. As part of your reasoning, pay special attention to the qualitative costs of outsourcing. (10)

outsourcing
Purchase price
Transportation cost
Inventory carrying cost
Administrative cost
Total per unit

insourcing
Manufacturing costs Direct labour
Materials
Indirect labour
depreciation
overhead
Total per unit