Refer to the facts in Problem 11-47. Cost records obtained from Farmington Components show the following cost structure in their departments:

Required
a. If Farmington outsources the Engineering Department, what is the maximum they can pay an outside vendor without increasing total costs?
b. If Farmington outsources the Administration Department, what is the maximum they can pay an outside vendor without increasing total costs?
c. If Farmington outsources the Maintenance Department, what is the maximum they can pay an outside vendor without increasing totalcosts?

Transcribed Image Text:

Engineering Administration Maintenance Fabrication Assembly Variable costs. $130,000 $700,000 $380,000 Fixed costs100000 630,000 120,000 1,050,000 120,000 $200,000 $950,000 250,000 $1,750,000 $500,000 $100,000 $320,000 Total costs Avoidable fixed costs 70,000 $400,000 70,000 912,500 75,000