Understanding the Scenario:The table compares the costs of four printing jobs performed by an "Internal Print Shop" versus three external vendors (Ace Printing, ABC Printing, and Printing, Inc.). Each vendor's pricing varies by print job type. The task is to evaluate whether outsourcing (hiring external vendors) is a reasonable alternative to keeping the work in-house.
Key Considerations in Outsourcing:According to governmental accounting principles and budgeting practices outlined by theAssociation of Government Accountants (AGA), the decision to outsource should consider:
Cost-effectiveness: Does outsourcing reduce costs without compromising quality or service delivery?
Operational efficiency: Can outsourcing free up internal resources for other priorities?
Comparative pricing: How do external vendor rates compare to internal costs for identical services?
Analysis of the Print Jobs:Let’s break down the cost comparison for each print job:
Zone Map:Internal cost = $4.23.Cheapest vendor = Printing, Inc., at $4.00.Outsourcing is cheaper for this job.
Agenda Packet:Internal cost = $23.18.Cheapest vendor = Printing, Inc., at $22.00.Outsourcing is cheaper for this job.
Budget Cover:Internal cost = $840.00.Cheapest vendor = ABC Printing, at $624.30.Outsourcing is significantly cheaper for this job.
Employee Benefit Brochure:Internal cost = $6.14.Cheapest vendor = ABC Printing, at $4.90.Outsourcing is cheaper for this job.
Conclusion Based on Analysis:
Across all four print jobs, the lowest-cost external vendor always beats the Internal Print Shop's costs.
From abudgetary perspective, outsourcing is feasible as it offers cost savings across all jobs.
Why Not A, C, or D?:
Option A(Keep printing in-house): Incorrect, as in-house costs are consistently higher than the cheapest external vendor.
Option C(Outsourcing is necessary): Incorrect, as feasibility doesn’t mean necessity; internal printing is still an option if other factors (like quality or control) outweigh costs.
Option D(Award contract to ABC Printing): Incorrect, since the best vendor depends on the job (e.g., Printing, Inc. is cheaper for Zone Map and Agenda Packet).
