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kati45 [8]
3 years ago
10

University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developi

ng). 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: Maintenance Personnel Printing Developing Machine-hours — 1,000 1,000 3,000 Labor-hours 500 — 500 2,000 Department direct costs $ 13,000 $ 38,250 $ 47,000 $ 31,500 University Printers estimates that the variable costs in the Personnel Department total $15,000 and in the Maintenance Department variable costs total $7,600. Avoidable fixed costs in the Personnel Department are $5,700. 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.)
Business
1 answer:
expeople1 [14]3 years ago
6 0

Answer:

First calculate total machine hours

1500 + 1500 + 4500 = 7500 total machine hours

personnel   = 1500/7500 x 4,800

printing   = 1500/7500 x 4,800

developing = 4500/7500 x 4,800

for personnel:

500 printing + 3,500 developing = 4,000

For Departments:

printing        = 500/4,000   x  15,760

developing   = 3,500/4,000x 15,760

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