SOLUTION: Question No. 1: Part - A: A leading firm requires a software for its internal use. The firm wants to evaluate whether it is less costly to have its own programming staff and r

Question 1173642: Question No. 1:
Part - A:
A leading firm requires a software for its internal use. The firm wants to evaluate whether it is less
costly to have its own programming staff and resources or to have programs developed by an
external development firm. The cost of both options are a function of the number of lines of code.
After the mathematical analysis it has been estimated that the in-house development will cost $1.75
per line of code. In addition, annual overhead costs for supporting the program will be $35000.
While Software developed outside the firm costs, on average, $2.5 per line of code.
a) How many lines of code per year make costs of the two options equal?
b) If programming needs are estimated at 35000 lines per year, what are the costs of the two
options?
c) In part b what would the in-house cost per line of code have to equal for the two options to be
equally costly?

Answer by mila nedic(19) (Show Source): You can put this solution on YOUR website!
First let's say that x is the number of lines of code, h=cost of the in house programming development, and s=cost of software developed outside the firm.
a) Here we want to figure out when h=s
h=35000+1.5x (formula for annual inhouse cost)
s=2.5x (formula for annual outside cost)
If h=s then 35000+1.5x=2.5x (subtract 1.5x from each side to get variable on one side)
x=35000
Therefore 35000 lines of code need to be made per year to make the costs equal.
b) We will input 35000 instead of x because it is the number of lines of code
h=35000+1.5*35000
=$87500
It was already established that with 35000 lines of code both costs will be equal but we will find the value for "s" just to check if our answer for a was correct.
s=2.5*35000
=$87500 (they are both the same)
Therefore the costs of both options is $87500
c) Since the options are already equally costly the inhouse cost per line would be the same as it already is which would be $1.5
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