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

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Accounting

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?

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