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You are deciding whether or not to outsource the designing activity necessary for the realization of a product. The activity is currently being run
You are deciding whether or not to outsource the designing activity necessary for the realization of a product. The activity is currently being run in-house by 5 designers providing a production capacity of 800 hours per month. The fixed monthly cost of the activity is $15,850, while the variable costs (related to the material used for drawing) are $1.25 per hour. You can buy the same quality of technical drawings on the market for an average of $24 per hour. REQUIRED: Calculate the capacity utilization rate that makes the two solutions indifferent.
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