SOLVE FOR B!!!!!! Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel
costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations
follows:
Baldwin Enterprises estimates that the cost structure in its operations is as follows:
Required:
a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? Correct answer is 134,000.
b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs? Incorrect answers include: 301,000 307,000 271,000 and 230,000
c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor. Correct answer is 364,000.
