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Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs IT Required: 0 16 $ 152,000 HR 1,525 0 $ 247,950 Publishing 2,440 24 $ 431,000 Binding 2,135 40 $ 392,500 Woodstock Binding estimates that the variable costs in the IT Department total $112,500, and in the HR Department variable costs t $142,500. Avoidable fixed costs in the IT Department are $18,250.

Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs IT Required: 0 16 $ 152,000 HR 1,525 0 $ 247,950 Publishing 2,440 24 $ 431,000 Binding 2,135 40 $ 392,500 Woodstock Binding estimates that the variable costs in the IT Department total $112,500, and in the HR Department variable costs t $142,500. Avoidable fixed costs in the IT Department are $18,250.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs IT 0 16 $ 152,000 Maximum amount HR 1,525 0 $ 247,950 X Answer is complete but not entirely correct. $ 132,180 Publishing 2,440 24 $ 431,000 Woodstock Binding estimates that the variable costs in the IT Department total $112,500, and in the HR Department variable costs to $142,500. Avoidable fixed costs in the IT Department are $18,250. Binding 2,135 40 $ 392,500 Required: If Woodstock Binding outsources the IT Department functions, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations.
Transcribed Image Text:Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs IT 0 16 $ 152,000 Maximum amount HR 1,525 0 $ 247,950 X Answer is complete but not entirely correct. $ 132,180 Publishing 2,440 24 $ 431,000 Woodstock Binding estimates that the variable costs in the IT Department total $112,500, and in the HR Department variable costs to $142,500. Avoidable fixed costs in the IT Department are $18,250. Binding 2,135 40 $ 392,500 Required: If Woodstock Binding outsources the IT Department functions, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations.
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