Exercise $6-13$A $($Algo$)$ Outsourcing decision affected by opportunity costs LO $6-3$

$14\mathrm{.}28$

Walton Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of

points

producing $9,100$ containers follows.

Unit$-$level materials

Unit$-$level labor

Unit$-$level overhead

Product$-$level costs$*$

Allocated facility$-$level costs

$$5,500$

$6,200$

$3,300$

$8,700$

$26,600$

$*$One$-$third of these costs, can be avoided by purchasing the containers.

Russo Container Company has offered to sell comparable containers to Walton for $$2\mathrm{.}80$ each.

Required

a$.$ Calculate the total relevant cost. Should Walton continue to make the containers?

b$.$ Walton could lease the space it currently uses in the manufacturing process. If leasing would produce $$11,500$ per month, calculate the total avoidable costs. Should Walton continue to make the containers?

$\backslash$table$[[$a$.$ Total relevant cost$],[$a$.$ Should Walton continue to make the containers?$],[$b$.$ Total avoidable cost$],[$b$.$ Should Walton continue to make the containers?$]]$