Perez Electronics currently produces the shipping producing 9,300 containers follows. $6,100 6,700 3,700 Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs. One-third of these costs can be avoided by purchasing the containers. 11,100 28,100
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![**Shipping Container Production Cost Analysis**
Perez Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers is as follows:
- Unit-level materials: $6,100
- Unit-level labor: $6,700
- Unit-level overhead: $3,700
- Product-level costs*: $11,100
- Allocated facility-level costs: $28,100
*Note: One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Perez for $2.50 each.
**Required Analysis**
a. Calculate the total relevant cost. Should Perez continue to make the containers?
b. Perez could lease the space it currently uses in the manufacturing process. If leasing would produce $12,500 per month, calculate the total avoidable costs. Should Perez continue to make the containers?
**Decision Table**
- a. Total relevant cost: [________]
- a. Should Perez continue to make the containers? [________]
- b. Total avoidable cost: [________]
- b. Should Perez continue to make the containers? [________]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad4b5cb5-49e1-448e-9a8c-59c669c3bca8%2F647c18c9-b5bb-420f-b8dc-a9581a7d2316%2Fpmiqzut_processed.jpeg&w=3840&q=75)
Businesses and people use decision-making to examine relevant costs in order to make educated choices, such as price decisions, make-or-buy decisions, capital investment decisions, and product discontinuance decisions. It is critical to identify and analyze just the relevant expenses in order to avoid distorting the decision-making process and arrive at more accurate judgments about the optimal course of action.
Note: “Since you have posted multiple questions, we will provide the solution only for the first question as per our Q&A guidelines. Please repost the remaining questions separately.”
Step by step
Solved in 3 steps
