Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows:

Personnel Legal Eastern Western

Employees $04012040$

Hours $10,80005,4001,800$

Department direct costs $ $300,000$ $ $160,000$ $ $1,200,000$ $ $790,000$

Baldwin Enterprises estimates that the cost structure in its operations is as follows:

Personnel Legal Eastern Western

Variable costs $$170,000$ $ $50,000$ $ $960,000$ $ $569,000$

Fixed costs $220,000128,000348,000239,000$

Total costs $ $390,000$ $ $178,000$ $ $1,308,000$ $ $808,000$

Avoidable fixed costs $ $59,000$ $ $29,000$ $ $240,000$ $ $240,000$

Required:

If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs?

If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs?

If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without increasing total costs?Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel

costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations

follows:

Baldwin Enterprises estimates that the cost structure in its operations is as follows:

Required:

a$.$ If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs?

b$.$ If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs?

c$.$ If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without

increasing total costs?