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			Domestic			International
Employees					25			15			60
Transactions		50,000						10,000			40,000
Department direct costs	$	52,000		$	27,000		$	158,000		$	602,000

BluStar estimates that the cost structure in its operations is as follows.

	Administration			Accounting			Domestic			International
Variable costs	$	25,500		$	5,000		$	114,000		$	430,000
Fixed costs		26,500			22,000			44,000			172,000
Total costs	$	52,000		$	27,000		$	158,000		$	602,000
Avoidable fixed costs	$	11,250		$	3,800		$	21,000		$	114,500

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?

8 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. 4 points Administration Accounting Domestic 25 15 50,000 10,000 $52,000 $27,000 $158,000 Employees Transactions Department direct costs International 60 40,000 $602,000 Skipped BluStar estimates that the cost structure in its operations is as follows. eBook Print Variable costs Fixed costs Total costs Avoidable fixed costs Administration Accounting $ 25,500 $ 5,000 26,500 22,000 $ 52,000 $27,000 $11,250 $ 3,800 Domestic $114,000 44,000 $ 158,000 $ 21,000 International $430,000 172,000 $602,000 $114,500 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 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