University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and...
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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: Maintenance Personnel 1,000 Machine-hours Labor-hours Department direct costs Printing 1,000 500 $41,750 500 $14,500 Developing 3,000 2,000 $31,000 $37,750 University Printers estimates that the variable costs in the Personnel Department total $22,000 and in the Maintenance Department variable costs total $7,700. Avoidable fixed costs in the Personnel Department are $5,500. 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.) Maximum Amount
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