Problem 11-64 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Baldwin Enterprises has two...

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Problem 11-64 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Personnel Legal 0 40 10,800 $ 300,000 $160,000 Eastern Western 120 5,400 40 1,800 $790,000 Department direct costs $ 1,200,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Variable costs Fixed costs Total costs Avoidable fixed costs Personnel $155,000 205,000 $360,000 $ 56,000 Legal $ 47,000 125,000 $ 172,000 $ 26,000 Eastern $930,000 342,000 $ 1,272,000 $210,000 Western $ 566,000 236,000 $ 802,000 $ 210,000 Problem 11-64 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Personnel Legal 0 40 10,800 $ 300,000 $160,000 Eastern Western 120 5,400 40 1,800 $790,000 Department direct costs $ 1,200,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Variable costs Fixed costs Total costs Avoidable fixed costs Personnel $155,000 205,000 $360,000 $ 56,000 Legal $ 47,000 125,000 $ 172,000 $ 26,000 Eastern $930,000 342,000 $ 1,272,000 $210,000 Western $ 566,000 236,000 $ 802,000 $ 210,000