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C Problem: Module 6 Textbook Problem 6 Learning Objective: 6-3 Make appropriate outsourcing decisions Thornton Electronics currently produces the shipping containers it uses to deliver
C Problem: Module 6 Textbook Problem 6 Learning Objective: 6-3 Make appropriate outsourcing decisions Thornton 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 $ 5,100 Unit-level labor 6,800 Unit-level overhead 3,500 Product-level costs 11,700 Allocated facility-level coats 28,100 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Thornton for $2.90 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 $12,600 per month calculate the total avoidable costs. Should Thornton continue to make the containers? a. Total relevant cost Should Thornton continue to make the containers? b. Total avoidable cost Should Thorton continue to make the containers
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