Jordan electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly costs of producing 9,100 containers follow Unit-level material $6,000 Unit-level labor $6,700 unit-level overhead $3,300 product-level costs* $11,700 Allocated facility-level costs $26,500 *one-third of these costs can be avoided by purchasing the containers. Russo container company has offered to sell comparable containers to Jordan for $2.80 each. Required a) Calculate the total relevant cost should Jordan continue to make the containers. b) Jordan could lease the space it currently uses in the manufacturing process if leasing would produce $11,700 per month, and calculate the total avoidable costs. Should Jordan continue to make the containers? a) Total relevant cost should Jordan continue to make the containers? Total avoidable cost Should Jordan continue to make the containers?
Jordan electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly costs of producing 9,100 containers follow
Unit-level material $6,000
Unit-level labor $6,700
unit-level
product-level costs* $11,700
Allocated facility-level costs $26,500
*one-third of these costs can be avoided by purchasing the containers.
Russo container company has offered to sell comparable containers to Jordan for $2.80 each.
Required
a) Calculate the total relevant cost should Jordan continue to make the containers.
b) Jordan could lease the space it currently uses in the manufacturing process if leasing would produce $11,700 per month, and calculate the total avoidable costs. Should Jordan continue to make the containers?
a) Total relevant cost
should Jordan continue to make the containers?
Total avoidable cost
Should Jordan continue to make the containers?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
