Question

Zachary Electronics currently produces the shipping containers it uses to deliver the electronics products it sells....

Zachary 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 $ 6,600
Unit-level labor 6,300
Unit-level overhead 4,100
Product-level costs* 9,900
Allocated facility-level costs 26,800

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

Russo Container Company has offered to sell comparable containers to Zachary for $2.70 each.

Calculate the total relevant cost. Should Zachary continue to make the containers?

Zachary could lease the space it currently uses in the manufacturing process. If leasing would produce $12,000 per month, calculate the total avoidable costs. Should Zachary continue to make the containers?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Calculate make or buy :

Make Buy
Material 6600
Labour 6300
Overhead 4100
Avoidable cost (9900/3) 3300
Purchase cost (9300*2.7) 25110
Total relevant cost 20300 25110

Yes, Zachary should continue to make the containers

Calculate make or buy :

Make Buy
Material 6600
Labour 6300
Overhead 4100
Avoidable cost (9900/3) 3300
Opportunity cost 12000
Purchase cost (9300*2.7) 25110
Total relevant cost 32300 25110

Total avoidable cost = 32300

No, Zachary should not continue to make the containers

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Gibson Electronics currently produces the shipping containers it uses to deliver the electronics products it sells....
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. Unit-level materials $ 5,200 Unit-level labor 6,400 Unit-level overhead 4,200 Product-level costs* 7,800 Allocated facility-level costs 27,900 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Gibson for $2.70 each. Required Calculate the total relevant cost. Should Gibson continue to make the containers? Gibson...
Benson Electronics currently produces the shipping containers it uses to deliver the electronics products it sells....
Benson 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 $ 6,600 Unit-level labor 6,800 Unit-level overhead 4,100 Product-level costs* 9,600 Allocated facility-level costs 27,000 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Benson for $2.60 each. Required Calculate the total relevant cost. Should Benson continue to make the containers? Benson...
Thornton Electronics currently produces the shipping containers it uses to deliver the electronics products it sells....
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 $ 5,700 Unit-level labor 6,400 Unit-level overhead 3,600 Product-level costs* 10,800 Allocated facility-level costs 26,500 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Thornton for $2.80 each. Required Calculate the total relevant cost. Should Thornton continue to make the containers? Thornton...
Jupiter Electronics produces and sells electronic accessories and is able to control the demand for the...
Jupiter Electronics produces and sells electronic accessories and is able to control the demand for the product by varying the selling price. The approximate relationship between price and demand is- p = $32 +(2, 100/D)− 4, 500/D^2 , for D > 1 Where, p is the price per unit in dollars and D is the demand per month. [5] Currently Jupiter is trying to reduce its supply chain risk by making more responsible make- or-buy decisions through improved cost estimation....
Ganus Products, Inc., has a Relay Division that manufactures and sells a number of products, including...
Ganus Products, Inc., has a Relay Division that manufactures and sells a number of products, including a standard relay that could be used by another division in the company, the Electronics Division, in one of its products. Data concerning that relay appear below: Capacity in units 42,500 Selling price to outside customers $ 33 Variable cost per unit $ 10 Fixed cost per unit (based on capacity) $ 20 The Electronics Division is currently purchasing 5,950 of these relays per...
Pistachio Company has a single product called a Dak. The company normally produces and sells 81,000...
Pistachio Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $56 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 7.50 Direct labor 10.00 Variable manufacturing overhead 2.50 Fixed manufacturing overhead 10.00 ($810,000 total) Variable selling expenses 2.70 Fixed selling expenses 2.50 ($202,500 total) Total cost per unit $ 35.20 Due to a strike in its supplier’s plant,...
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling price of $60 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 10.00 Variable manufacturing overhead 2.70 Fixed manufacturing overhead 6.00 ($528,000 total) Variable selling expenses 2.70 Fixed selling expenses 3.00 ($264,000 total) Total cost per unit $ 33.90 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 83,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 83,000 Daks each year at a selling price of $60 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 9.00 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 9.00 ($747,000 total) Variable selling expenses 2.70 Fixed selling expenses 3.50 ($290,500 total) Total cost per unit $ 36.00 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $46 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 6.50 Direct labor 9.00 Variable manufacturing overhead 2.50 Fixed manufacturing overhead 4.00 ($328,000 total) Variable selling expenses 2.70 Fixed selling expenses 4.50 ($369,000 total) Total cost per unit $ 29.20 A number of questions relating to the production...
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000...
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling price of $56 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 9.00 Variable manufacturing overhead 1.90 Fixed manufacturing overhead 6.00 ($528,000 total) Variable selling expenses 2.70 Fixed selling expenses 4.50 ($396,000 total) Total cost per unit $ 33.60 A number of questions relating to the production...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT