Iniversity 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 ersonnel costs on the basis of labor-hours worked by the employees in each. he following data appear in the company records for the current period: Maintenance Personnel Printing Developing 3,000 2,e0e $31, se0 Machine-hours 1,000 1,00e see Labor-hours Department direct costs see $15,000 $36, 500 $46, 300 Iniversity Printers estimates that the variable costs in the Personnel Department total $20.000 and In the Maintenance Department artable costs total $7300. Avoidable fixed costs in the Personnel Department are $5.600.
Iniversity 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 ersonnel costs on the basis of labor-hours worked by the employees in each. he following data appear in the company records for the current period: Maintenance Personnel Printing Developing 3,000 2,e0e $31, se0 Machine-hours 1,000 1,00e see Labor-hours Department direct costs see $15,000 $36, 500 $46, 300 Iniversity Printers estimates that the variable costs in the Personnel Department total $20.000 and In the Maintenance Department artable costs total $7300. Avoidable fixed costs in the Personnel Department are $5.600.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1.) 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.)
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
Transcribed Image Text: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 perlod:
Maintenance
Personnel
Printing
1,e0e
500
$46, 300
Developing
3,808
2, e00
$31,588
Machine-hours
1,e00
Labor-hours
500
Departnent direct costs
$15,800
$36, 500
University Printers estimates that the varlable costs In the Personnel Department total $20,000 and in the Malntenance Department
varlable costs total $7,300. Avoldable fixed costs in the Personnel Department are $5,600.
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