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Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs IT HR 0 22 1,590 10 Publishing 2,544 33 Binding 2,226 55 $ 157,200 $ 249,120 $ 433,600 $ 399,000 Woodstock Binding estimates that the variable costs in the IT Department total $119,000, and in the HR Department variable costs total $149,000. Avoidable fixed costs in the IT Department are $18,900. Required: If Woodstock Binding outsources the IT Department functions, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations. Maximum amount
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