A U.S.hospital system is considering outsourcing a portion of its diagnostic workload to a medical consulting firm based in India.In the United States these diagnostic services,done internally by the hospital system,cost $700,000 per year.The consulting firm would charge $400,000 per year for the same workload.In addition,the hospital system expects to spend $50,000 per year in managerial oversight,$8,000 per year administering the contract,and $125,000 to initially train the consulting firm's staff (amortized over five years) .What is the total annual outsourcing cost during the first five years?
A) $400,000.
B) $483,000.
C) $578,000.
D) None of the above.
Correct Answer:
Verified
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