BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
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BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Employees Transactions Department direct costs Administration Accounting 25 Domestic International 15 50,000 $69,000 $21,500 10,000 $158,750 60 40,000 $604,000 BluStar estimates that the cost structure in its operations is as follows. Variable costs Fixed costs Total costs Avoidable fixed costs Required: Administration $ 24,000 45,000 $ 69,000 Accounting $ 5,500 16,000 $21,500 Domestic $115,000 43,750 International $429,000 175,000 $158,750 $604,000 $ 11,750 $ 4,200 $ 19,500 $113,000 a. If BluStar outsources the Administration Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If BluStar outsources the Accounting Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If BluStar outsources both the Administration and the Accounting Departments, what is the maximum it can pay an outside vendor without increasing total costs? Complete this question by entering your answers in the tabs below. Required A Required B Required C If BluStar outsources the Administration Department, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.) Maximum amount < Required A Required B Complete this question by entering your answers in the tabs below. Required A Required B Required C If BluStar outsources the Accounting Department, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.) Maximum amount < Required A Required C > Complete this question by entering your answers in the tabs below. Required A Required B Required C If BluStar outsources both the Administration and the Accounting Departments, what is the maximum it can pay an outside vendor without increasing total costs? Maximum amount < Required B Required C > BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Employees Transactions Department direct costs Administration Accounting 25 Domestic International 15 50,000 $69,000 $21,500 10,000 $158,750 60 40,000 $604,000 BluStar estimates that the cost structure in its operations is as follows. Variable costs Fixed costs Total costs Avoidable fixed costs Required: Administration $ 24,000 45,000 $ 69,000 Accounting $ 5,500 16,000 $21,500 Domestic $115,000 43,750 International $429,000 175,000 $158,750 $604,000 $ 11,750 $ 4,200 $ 19,500 $113,000 a. If BluStar outsources the Administration Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If BluStar outsources the Accounting Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If BluStar outsources both the Administration and the Accounting Departments, what is the maximum it can pay an outside vendor without increasing total costs? Complete this question by entering your answers in the tabs below. Required A Required B Required C If BluStar outsources the Administration Department, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.) Maximum amount < Required A Required B Complete this question by entering your answers in the tabs below. Required A Required B Required C If BluStar outsources the Accounting Department, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.) Maximum amount < Required A Required C > Complete this question by entering your answers in the tabs below. Required A Required B Required C If BluStar outsources both the Administration and the Accounting Departments, what is the maximum it can pay an outside vendor without increasing total costs? Maximum amount < Required B Required C >
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