+ eBook Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow. Department Machining Assembly Maintenance Cafeteria Direct Costs $160,000 65,000 45,000 30,000 Proportion of Services Used by Maintenance cafeteria Machining Assembly Maximum Amount 8.5 0.1 0.1 Caro estimates that the variable costs in the Maintenance Department total $12,000, and in the Cafeteria variable costs total $17,000. Avoldable fixed costs in the Maintenance Department are $8,000. Required: If Caro outsources the Maintenance Department, what is the maximum It can pay an outside vendor without increasing total costs? (Do not round Intermediate calculations.)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and
Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of
August follow.
Department
Machining
Assembly
Maintenance
Cafeteria
Direct
Costs
$160,000
65,000
45,000
30,000
Maximum Amount
Proportion of Services Used by
Maintenance Cafeteria Machining Assembly
8.5
0.1
0.3
0.1
Caro estimates that the variable costs in the Maintenance Department total $12,000, and in the Cafeteria variable costs total $17,000.
Avoldable fixed costs in the Maintenance Department are $8,000.
Required:
If Caro outsources the Maintenance Department, what is the maximum It can pay an outside vendor without increasing total costs? (Do
not round Intermediate calculations.)
Transcribed Image Text:4 eBook References Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow. Department Machining Assembly Maintenance Cafeteria Direct Costs $160,000 65,000 45,000 30,000 Maximum Amount Proportion of Services Used by Maintenance Cafeteria Machining Assembly 8.5 0.1 0.3 0.1 Caro estimates that the variable costs in the Maintenance Department total $12,000, and in the Cafeteria variable costs total $17,000. Avoldable fixed costs in the Maintenance Department are $8,000. Required: If Caro outsources the Maintenance Department, what is the maximum It can pay an outside vendor without increasing total costs? (Do not round Intermediate calculations.)
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