Thornton Electronics currently produces the shipping containers it uses to deliver the electronics products it sells....
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Thornton 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* $5,700 6,000 3,300 7,800 28,000 Allocated facility-level costs "One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Thornton for $2.60 each. Required a. Calculate the total relevant cost. Should Thornton continue to make the containers? b. Thornton could lease the space it currently uses in the manufacturing process. If leasing would produce $11,400 per month, calculate the total avoidable costs. Should Thornton continue to make the containers? Thornton 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* $5,700 6,000 3,300 7,800 28,000 Allocated facility-level costs "One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Thornton for $2.60 each. Required a. Calculate the total relevant cost. Should Thornton continue to make the containers? b. Thornton could lease the space it currently uses in the manufacturing process. If leasing would produce $11,400 per month, calculate the total avoidable costs. Should Thornton continue to make the containers?
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a To determine whether Thornton Electronics should continue to make the containers we need to calcul... View the full answer
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