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Boise, a division of Price Enterprises, currently performs computer services for various departments of the firm. One of the services has created a number of

Boise, a division of Price Enterprises, currently performs computer services for various departments of the firm. One of the services has created a number of operating problems, and management is exploring whether to outsource the service to a consultant. Traceable variable and fixed operating costs total $92,000 and $37,000, respectively, in addition to $30,000 of corporate administrative overhead allocated from Price. If Boise were to use the outside consultant, fixed operating costs would be reduced by 70%. The irrelevant costs in Boises outsourcing decision total:

Multiple Choice

  • $25,900.

  • $30,000.

  • $37,000.

  • $41,100.

  • None of the answers is correct.

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