Caro estimates that the variable costs in the Maintenance Department total $11,000, and in the Cafeteria variable costs total $17,000. Avoidable fixed costs in the Maintenance Department are $5,000. Required: If Caro outsources the Maintenance Department, what is the maximum it can pay an outside vendor without increasing total costs

If Caro outsources only the Maintenance department, she should pay not more than $11,000, the avoidable Fixed Costs is incidental to her operations and not that of the outsource partner thus the $5,000 shouldn't be included as a payment due the Outsource Partner.

Caro decision case

Maintenance department total costs:

Variable - $11,000

Avoidable fixed costs - $5,000

Total costs (if not outsourced) = $16,000

Explanation:

Waiting is a bad idea because you could lose good opportunities in the time you wait. Choosing the same career as someone you admire might not be what you would best enjoy or succeed in, and the job that earns you the most money isn't necessarily the most enjoyable. The answer is A :)