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Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs
Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded: Using Department Maintenance Department Processing Administration 50% Branches 10% Processing Electronic 40% Maint n Direct cost coo 10% 20% S95,000 $580,000 $238.000 $4,600,000 $2,400,000 The cost accountant at Great Eastem Credit Union estimates that the cost structures in its departments are as follows M $131.000 107,000 $238,000 Ac ng on S64.000 1550 000 3,050,000 Variable costs $157,000 423,000 $1.100.000 31,000 300,000 Fixed costs $95.000 $2.400,000 S580,000 ,600,000 Total costs $15,000 S283,000 650,000 84,000 $ 630.000 Avoidable fixed costs Required: . If GECU outsources the Processing Department, what is the maximum it can pay an outside vendor without increasing total costs? Maximum amount b. If GECU outsources the Administration Department, what the maximum it can pay an outside vendor without increasing total costs? Maximum amount . If GECU outsources the Maintenance Department, what is the maximum it can pay an outside vendor without increasing total costs? Mavimum amount
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