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9 BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International Administration costs are allocated on the basis of

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9 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. 10 ployees Transaction Department direct conta Aistration Accounting Domestic International 25 15 60 50,000 10,000 40,000 553,000 $23,000 $157,500 5598.000 Blu Star estimates that the cost structure in its operations is as follows. Administration Accounting Domestic Variable costs $23.500 $5,200 $113,000 Fixed cost 29.500 12.00 46,500 Total coste 353,000 $23,000 $157,500 Avoidable fixed costs $9.000 $ 4.700 $ 21,000 0 International 5630,000 160,000 5595,000 $114,500 Required: a. Blustar outsources the Administration Department, what is the maximum it can pay an outside vendor without increasing total b. BluStar outsources the Accounting Department, what is the maximum it can pay an outside vendor without increasing total costs? c. 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 If BluStar outsources the Administration Department, what is the maximum it can pay an outside vendor with total costs? (Do not round intermediate calculations.) operation: $157,5 $ 21,000 $ 44 ation Accounting $ 5,200 17,800 $ 23,000 $ 4,700 500 9,500 $ 53,000 $ 9,000 Requir ces the Administration Department, what is the maximum it ca tsources the Accounting Department, what is the maximum it can pay al outsources both the Administration and the Accounting Departments, what is creasing total costs? cm Required Required B

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