BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and...
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Accounting
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and Intemational. 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 Employees Transactions Department direct costs 15 10,000 $23,000 $157,750 25 50,000 $63,000 80 40,000 $609,000 BluStar estimates that the cost structure in its operations is as follows: $431,000 178,000 $609,000 S11,00o000 4,000 $113,500 S 27,500 35,500 S 63,000 Variable costs Fixed costs Total costs Avaidable fixed casts S 5,800 7,100 $111,000 46,750 $157,750 23,000 Required: a. 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.) 1 amourit b. 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.) c. If BluStar outsources both the Administration and the Accounting Departments what is the maximum it can pay an outside vendor without increasing total cos amount
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