Warren Ltd has two production departments Building A and Building B and two service departments Maintenance and Cafeteria Direct costs for each department and the proportion of service costs used by the various departments for the month of June follow:
Proportaion of Services Used by:
|Department||Direct Costs||Maintenance||Cafeteria||Building A||Building B|
Warren estimates that the variable costs in the Maintenance Department total $137.000, and in the Cafeteria variable costs total $161,000. Avoidable fixed costs in the Maintenance Department are $95.000 .
If Warren outsources the max mum they can pay an outside vendor Without increasing total cost? (Do not round your fractions Round other intermediate dollars & final answer to the nearest dollar amount)
Variable cost is a cost that varies with the production level. If thge production of goods and services increases the total variable cost will also increase. If the production decreases then the total variable cost will also decrease.
Answer and Explanation:
|Allocation Cost To ($)|
|Department From||Maintenance||Cafeteria||Building A||Building B|
|Service Department Cost||395,000||305,000|
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Financial Accounting: Help and ReviewChapter 13 / Lesson 5