PGMP · Question #332
You are the program manager for your organization and you're trying to determine if you buy or build a software solution for your organization. If you build the solution it'll cost you $75,000 to crea
The correct answer is C. Approximately 3.5 months. This is a break-even analysis. Set the total costs equal to find the crossover point: In-house cost = $75,000 + ($12,000 × months). Vendor cost = $63,000 + ($15,500 × months). Setting them equal: 75,000 + 12,000x = 63,000 + 15,500x → 12,000 = 3,500x → x = 12,000 ÷ 3,500 ≈ 3.43 mo
Question
You are the program manager for your organization and you're trying to determine if you buy or build a software solution for your organization. If you build the solution it'll cost you $75,000 to create and it'll cost you $12,000 per month to support. If you hire a vendor they can build the solution for $63,000 but their solution will cost you $15,500 per month to support. How many months would you have to use your in-house solution to equate to the cost of the vendor's solution?
Options
- AApproximately 6 months
- BYou'll never be able to equate to the cost of the vendor's solution.
- CApproximately 3.5 months
- DApproximately 10 months
How the community answered
(56 responses)- A13% (7)
- B5% (3)
- C79% (44)
- D4% (2)
Explanation
This is a break-even analysis. Set the total costs equal to find the crossover point: In-house cost = $75,000 + ($12,000 × months). Vendor cost = $63,000 + ($15,500 × months). Setting them equal: 75,000 + 12,000x = 63,000 + 15,500x → 12,000 = 3,500x → x = 12,000 ÷ 3,500 ≈ 3.43 months. This rounds to approximately 3.5 months, meaning after roughly 3.5 months of use, the in-house solution equals the vendor solution in total cost. Answer: C.
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