Adult Math Word Problem

Question

Task A requires 10-hours of your time per month. There are independent service providers who handle Task A on an outsourced basis. Engaging a quality service provider will reduce your monthly time allocation by 8 hours (down to 2hrs review and execution). If the employees salary is $65,000/year or $75,000/year, what is the monthly service provider fee at which outsourcing Task A becomes cost-effective?

Answer 1

You are paying an employee $31.50/hr. at $65,000/year and  $36.06/hr. at $75,000/year, if we assume these employees are worked at 40 hour work weeks. Taking a 10 hour task into consideration would cost you $315.00 if the $65,000/yr. employee was allocated to the task and $360.60 if the $75,000/yr. employee was allocated to the task. If by outsourcing this task you are able to reduce execution of this task by 8 hours, you are enable to incur a cost savings of between $250 and $288.48 on this task per month. If all variable cost associated with outsourcing this task does not exceed $250 a month, outsourcing this task would be cost effective. You would just need to ensure everything needing to execute this task from retrieval and logistics is considered with this cost.