Answered step by step
Verified Expert Solution
Link Copied!

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,

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

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 $69,000 Domestic 15 10,000 $ 158,750 International 60 40,000 $604,000 $21,500 BluStar estimates that the cost structure in its operations is as follows. Variable costs Fixed costs Total costs Avoidable fixed costs Administration $ 24,000 45,000 $ 69,000 $ 11,750 Accounting $ 5,500 16,000 $21,500 $ 4,200 Domestic $ 115,000 43,750 $ 158,750 $ 19,500 International $429,000 175,000 $604,000 $113,000 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 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 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Concept And Objectives Of Quality Auditing ISO 9001Total Quality Management

Authors: Mahmoud Fadhel Idan

1st Edition

6202795158, 978-6202795159

More Books

Students also viewed these Accounting questions