Exercise 11-37 (Static) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control Proportion of Services Used by Quality Control Direct Costs Repair $ 140,600 98,200 42,000 78,400 0 0.3 0.3 0 Fabricating Finishing 0.4 0.2 0.3 0.5 Mack Precision Tool and Die estimates that the variable costs in the Repair Department total $15,225, and in Quality Control variable costs total $39,200. Avoidable fixed costs in the Repair Department are $12,400. Required: If Mack Precision Tool and Die outsources the Repair Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations.

Exercise 11-37 (Static) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Mack Precision Tool and Die estimates that the variable costs in the Repair Department total \$15,225, and in Quality Control variable costs total $39,200. Avoidable fixed costs in the Repair Department are $12,400. Required: Required: If Mack Precision Tool and Die outsources the Repair Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations. Exercise 11-37 (Static) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Mack Precision Tool and Die estimates that the variable costs in the Repair Department total $15,225, and in Quality Control variable costs total \$39,200. Avoidable fixed costs in the Repair Department are \$12,400. Required: If Mack Precision Tool and Die outsources the Repair Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations