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: Personnel 120 10,800 $ 300,000 5,400 $ 1,200,000 $ 160,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Employees Hours Department direct costs Variable costs Fixed costs Total costs Avoidable fixed costs Personnel $200,000 250,000 $ 450,000 $ 65,000 Required A Required B Required C Legal Maximum amount 40 0 Legal $ 56,000 134,000 $ 190,000 $ 35,000 Eastern Complete this question by entering your answers in the tabs below. < Required A Eastern $ 1,020,000 360,000 $ 1,380,000 $300,000 Required: a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without increasing total costs? Western 40 1,800 $ 790,000 If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations. Required B > Western $575,000 245,000 $ 820,000 $300,000
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: Personnel 120 10,800 $ 300,000 5,400 $ 1,200,000 $ 160,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Employees Hours Department direct costs Variable costs Fixed costs Total costs Avoidable fixed costs Personnel $200,000 250,000 $ 450,000 $ 65,000 Required A Required B Required C Legal Maximum amount 40 0 Legal $ 56,000 134,000 $ 190,000 $ 35,000 Eastern Complete this question by entering your answers in the tabs below. < Required A Eastern $ 1,020,000 360,000 $ 1,380,000 $300,000 Required: a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without increasing total costs? Western 40 1,800 $ 790,000 If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations. Required B > Western $575,000 245,000 $ 820,000 $300,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text: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:
Personnel
120
10,800
$ 300,000
5,400
$ 1,200,000
$ 160,000
Baldwin Enterprises estimates that the cost structure in its operations is as follows:
Employees
Hours
Department direct costs
Variable costs
Fixed costs
Total costs
Avoidable fixed costs
Personnel
$200,000
250,000
$ 450,000
$ 65,000
Required A Required B Required C
Legal
Maximum amount
40
0
Legal
$ 56,000
134,000
$ 190,000
$ 35,000
Eastern
Complete this question by entering your answers in the tabs below.
< Required A
Eastern
$ 1,020,000
360,000
$ 1,380,000
$300,000
Required:
a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs?
b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs?
c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without
increasing total costs?
Western
40
1,800
$ 790,000
If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total
costs?
Note: Do not round intermediate calculations.
Required B >
Western
$575,000
245,000
$ 820,000
$300,000
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