Refer to the facts in Exercise 11-26. Caro estimates that the variable costs in the Maintenance Department

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Refer to the facts in Exercise 11-26. Caro estimates that the variable costs in the Maintenance Department total $14,500, and in the Cafeteria variable costs total $16,000. Avoidable fixed costs in the Maintenance Department are $9,000.

Required
If Caro outsources the Maintenance Department, what is the maximum it can pay an outside vendor without increasing total costs?

Data From Exercise 11-26:

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:

                           

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Related Book For  book-img-for-question

Fundamentals of Cost Accounting

ISBN: 978-1259565403

5th edition

Authors: William Lanen, Shannon Anderson, Michael Maher

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