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

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

producing $9,300$ containers follows.

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

Russo Container Company has offered to sell comparable containers to Gibson for $$2\mathrm{.}90$ each.

Required

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

b$.$ Gibson could lease the space it currently uses in the manufacturing process. If leasing would produce $$12,700$ per month, calculate

the total avoidable costs. Should Gibson continue to make the containers?