Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:

Supplying Department	Using Department
Transactions	IT	Operations	Retail	Commercial
Transactions	0%	0%	0%	70%	30%
IT	10%	0%	30%	30%	30%
Operations	70%	0%	0%	10%	20%
Direct cost	$ 310,000	$ 730,000	$ 1,570,000	$ 3,770,000	$ 2,320,000

The cost accountant at Dunedin Bank estimates that the cost structures in its departments are as follows:

	Transactions	IT	Operations	Retail	Commercial
Variable costs	$194,000	$ 395,000	$ 515,000	$ 1,640,000	$ 1,114,000
Fixed costs	116,000	335,000	1,055,000	2,130,000	1,206,000
Total costs	$ 310,000	$ 730,000	$ 1,570,000	$ 3,770,000	$ 2,320,000
Avoidable fixed costs	$ 19,400	$ 254,000	$ 890,000	$ 1,650,000	$ 755,000

Required:

1. If Dunedin Bank outsources the Transactions Department, what is the maximum it can pay an outside vendor without increasing total costs?
2. If Dunedin Bank outsources the IT Department, what is the maximum it can pay an outside vendor without increasing total costs?
3. If Dunedin Bank outsources the Operations Department, what is the maximum it can pay an outside vendor without increasing total costs?

\begin{tabular}{|l|l|} \hline & \begin{tabular}{c} Maximum \\ Amount \end{tabular} \\ \hline a. Transactions Department & \\ \hline b. IT Department & \\ \hline c. Operations Department & \\ \hline \end{tabular}