Computer Intelligence, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Barach O'Bama, a pricing analyst in the accounting department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. Barach assembled the following data from the six service departments, Information Systems, Facilities Maintenance, Human Resources, Research & Development, Purchasing, Payroll Accounting.
			Service Departments							Production Departments
			Information Systems	Human Resources	Facilities Maintenance	Research & Development	Purchasing	Payroll Accounting		Computer programming	Info. Systems consulting	Software training
Budgeted overhead			$83,600	$96,500	$77,100	$76,200	$101,100	$58,700		$730,900	$768,400	$862,800
Information Systems			60	100	80	50	50	60		870	690	810
Human Resources			780	640	780	570	670	700		9,600	8,370	5,050
Facilities Maintenance			50	60	110	50	90	80		910	740	710
Research & Development			650	950	930	720	780	900		9,780	8,840	8,450
Purchasing			60	90	100	70	90	90		840	820	750
Payroll Accounting			950	910	930	810	690	490		7,040	6,780	9,470
1 Allocated on the basis of hours of computer usage. 2 Allocated on the basis of floor space.
Required:
Using the above data, apply overhead from these service departments to the production departments, using the reciprocal method.
			Support Departments							Producing Departments
			Information Systems	Human Resources	Facilities Maintenance	Research & Development	Purchasing	Payroll Accounting		Computer programming	Info. Systems consulting	Software training
		[A]
													Total
		[I]
		[C]
		[I-A]
		[I-A] inverse
		[B]
An outsourcer has offered to perform the Facilities Maintenance service for									$96,000
Should Computer Intelligence accept the offer to outsource the Facilities Maintenance department?
At what dollar amount would you be indifferent between acceptingot accepting the outsourcer's proposal?