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University Printers has two service departments (Maintenance and Personnel) and two oparating departments (Printing and Developing). Management has dacded to allocata maintenance costs on the
University Printers has two service departments (Maintenance and Personnel) and two oparating departments (Printing and Developing). Management has dacded to allocata maintenance costs on the basls of machine-hours in each department and personnel costs on tha basis or labor hours woroed by the employees in each. as deckded and personnel costs on the The followng data appear in the company records for the current penod: 3,000 2000 Labor-hours Department drect costs $12,500 538,500 543.150 anable University Printers estimates that the valable costs in the Personnel Department total $16,000 and in the Maintenance Department varlable coss total $9,100. Avoidable fxed costs in the Personnel Department are $5.800 Required: If University Printers outsources the Personnel Department functions, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.)
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