PLease see attached image.Thanks,jen University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing andDeveloping). Management has decided to allocate maintenance costs on the basis of machine-hours in each department andpersonnel costs on the basis of labor-hours worked by the employees in each.The following data appear in the company records for the current period:MaintenancePersonnelPrinting1,000Developing3,0002,000$10,000Machine-hours1,000Labor-hours500500Department direct costs$ 5,000$12,000$15,000University Printers estimates that the variable costs in the Personnel Department total $7,000 and in the Maintenance Departmentvariable costs total $3,000. Avoidable fixed costs in the Personnel Department are $4,000.Required:If University Printers outsources the Personnel Department functions, what is the maximum it can pay an outside vendor withoutincreasing total costs? (Do not round intermediate calculations.)

Maximum Amount Payable = Avoidable Cost of Personnel Department

University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Printing Developing 3,000 2,000 $10,000 Maintenance Personnel Machine-hours 1,000 1,000 Labor-hours 500 500 Department direct costs $ 5,000 $12,000 $15,000 University Printers estimates that the variable costs in the Personnel Department total $7,000 and in the Maintenance Department variable costs total $3,000. Avoidable fixed costs in the Personnel Department are $4,000. Required: If University Printers outsources the Personnel Department functions, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.)

University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Printing Developing 3,000 2,000 $10,000 Maintenance Personnel Machine-hours 1,000 1,000 Labor-hours 500 500 Department direct costs $ 5,000 $12,000 $15,000 University Printers estimates that the variable costs in the Personnel Department total $7,000 and in the Maintenance Department variable costs total $3,000. Avoidable fixed costs in the Personnel Department are $4,000. Required: If University Printers outsources the Personnel Department functions, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 14E: Vargas, Inc., produces industrial machinery. Vargas has a machining department and a group of direct...

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