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

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Accounting

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Fanning Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,400 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,000 6,400 3,700 11,100 26,800 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Fanning for $2.60 each. Required a. Calculate the total relevant cost. Should Fanning continue to make the containers? b. Fanning could lease the space it currently uses in the manufacturing process. If leasing would produce $12,100 per month, calculate the total avoidable costs. Should Fanning continue to make the containers? Answer is complete but not entirely correct. a. Total relevant cost 54,000 X Yes b. Should Fanning continue to make the containers? Total avoidable cost Should Fanning continue to make the containers? $ 39,300 X No

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