Problem: Module 6 Textbook Problem 6 Learning Objective: 6-3 Make appropriate outsourcing decisions Perez Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9.200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs Allocated facility-level costs $ 5,400 6,800 4,100 9,600 27,900 "One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Perez for $2.80 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 $11,700 per month, calculate the total avoidable costs. Should Perez continue to make the containers? Total relevant cost Should Perez continue to make the containers? b. Total avoidable cost Should Perez continue to make the containers?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Problem: Module 6 Textbook Problem 6
Learning Objective: 6-3 Make appropriate outsourcing decisions
Perez Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of
producing 9.200 containers follows.
Unit-level materials
Unit-level labor
Unit-level overhead
Product-level costs
Allocated facility-level costs
$5,400
6,800
4,100
9,600
27,900
"One-third of these costs can be avoided by purchasing the containers.
Russo Container Company has offered to sell comparable containers to Perez for $2.80 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 $11,700 per month, calculate
the total avoidable costs. Should Perez continue to make the containers?
a Total relevant cost
Should Perez continue to make the containers?
b. Total avoidable cost
Should Perez continue to make the containers?
Transcribed Image Text:Problem: Module 6 Textbook Problem 6 Learning Objective: 6-3 Make appropriate outsourcing decisions Perez Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9.200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs Allocated facility-level costs $5,400 6,800 4,100 9,600 27,900 "One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Perez for $2.80 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 $11,700 per month, calculate the total avoidable costs. Should Perez continue to make the containers? a Total relevant cost Should Perez continue to make the containers? b. Total avoidable cost Should Perez continue to make the containers?
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