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.
![Perez Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of
producing 9,300 containers follows.
Unit-level materials
Unit-level labor
Unit-level overhead
Product-level costs*
Allocated facility-level costs.
$6,100
6,700
3,700
11,100
28,100
*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
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?
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)
![Franklin Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside
Franklin's normal sales territory, asks Franklin to pour 43 slabs for Lancing's new development of homes. Franklin has the capacity to
build 480 slabs and is presently working on 100 of them. Lancing is willing to pay only $2,560 per slab. Franklin estimates the cost of a
typical job to include unit-level materials, $860; unit-level labor, $560; and an allocated portion of facility-level overhead, $1,220.
Required
Calculate the contribution to profit from the special order. Should Franklin accept or reject the special order to pour 43 slabs for
$2,560 each?
Contribution to profit
Should Franklin accept or reject the special order?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad4b5cb5-49e1-448e-9a8c-59c669c3bca8%2F647c18c9-b5bb-420f-b8dc-a9581a7d2316%2F02b60ma_processed.jpeg&w=3840&q=75)
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