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Benson Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level
Benson Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,900 6,600 3,500 10,500 27,800 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Benson for $2.80 each. Required a. Calculate the total relevant cost. Should Benson continue to make the containers? b. Benson could lease the space it currently uses in the manufacturing process. If leasing would produce $11,500 per month, calculate the total avoidable costs. Should Benson continue to make the containers? a. Total relevant cost Should Benson continue to make the containers? Yes b. Total avoidable cost Should Benson continue to make the containers? Yes
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