11-65 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-4, 5) 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 50,000 $57,000 Accounting 25 Domestic International 15 60 $27,500 10,000 $158,500 40,000 $605,000 BluStar estimates that the cost structure in its operations is as follows. Administration Accounting Domestic International Variable costs $27,500 $5,700 $111,000 $439,000 Fixed costs 29,500 21,800 47,500 166,000 Total costs. $ 57,000 $27,500 $158,500 $685,000 Avoidable fixed costs $ 8,250 $3,600 $ 19,500 $110,000 Required: 6. 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 Administration Accounting Domestic International Variable costs Fixed costs Total costs $ 27,500 29,500 $ 5,700 $ 57,000 21,800 $27,500 Avoidable fixed costs $ 8,250 $3,600 $111,000 47,500 $158,500 $ 19,508 $439,000 166,000 $685,000 $110,000 Required: e. 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 Accounting Department, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.) Maxomum amount ees ctions ment direct costs 50,000 $57,000 10,000 $27,500 $158,500 40,000 $685,000 estimates that the cost structure in its operations is as follows. Administration Accounting Domestic International able costs ed costs $ 27,500 29,500 $ 5,700 $111,000 $439,000 21,800 47,500 166,000 al costs $ 57,000 $27,500 $158,500 $605,000 idable fixed costs $ 8,250 $ 3,600 $ 19,500 $110,000 ulred: BluStar outsources the Administration Department, what is the maximum it can pay an outside vendor without increasing ts? BluStar outsources the Accounting Department, what is the maximum it can pay an outside vendor without increasing tot BluStar outsources both the Administration and the Accounting Departments, what is the maximum it can pay an outside thout increasing total costs? 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 Prev 8 of 10 Next >