Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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,
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. Administration Accounting 25 Employees Transactions Department direct costs 50,000 $55,000 Domestic 15 10,000 $158,750 International 60 40,000 $596,000 $29,500 BluStar estimates that the cost structure in its operations is as follows. Variable costs Fixed costs Total costs Avoidable fixed costs Administration $ 24,000 31,000 $ 55,000 $ 11,250 Accounting $ 5,400 24,100 $29,500 $ 4,500 Domestic $110,000 48,750 $ 158,750 $ 23,500 International $440,000 156,000 $596,000 $111,000 Required: 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 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 numb of transactions. A summary of BluStar operations follows Administration Accounting 25 Employees Transactions Department direct costs Domestic International 15 60 10,000 40,000 $ 158,750 $596,000 50,000 $55,000 $29,500 BluStar estimates that the cost structure in its operations is as follows. Variable costs Fixed costs Total costs Avoidable fixed costs Administration $ 24,000 31,000 $ 55,000 $ 11,250 Accounting $ 5,400 24,100 $29,500 $ 4,500 Domestic $110,000 48,750 $ 158,750 $ 23,500 International $440,000 156,000 $596,000 $111,000 Required: 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 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.) 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 nu of transactions. A summary of BluStar operations follows. ts Administration Accounting 25 Employees Transactions Department direct costs Domestic 15 10,000 $ 158,750 Skipped 50,000 $55,000 International 60 40,000 $596,000 $29,500 BluStar estimates that the cost structure in its operations is as follows. eBook Administration Accounting $ 24,000 $ 5,400 31,000 24,100 $ 55,000 $29,500 $ 11,250 $ 4,500 Variable costs Fixed costs Total costs Avoidable fixed costs Domestic $110,000 48,750 $158,750 $ 23,500 International $440,000 156,000 $596,000 $111,000 Print Required: 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 cost c. If BluStar outsources both the Administration and the Accounting Departments, what is the maximum it can pay an outside vendo without increasing total costs? Complete this question by entering your answers in the tabs below. Required A Required B Required 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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started