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Jordan Corporation, which makes and sells 80,700 radios annually, currently purchases the radio speakers it uses for $26 each. Each radio uses one speaker. The
Jordan Corporation, which makes and sells 80,700 radios annually, currently purchases the radio speakers it uses for $26 each. Each radio uses one speaker. The company has idle capacity and is considering the possibility of making the speakers that it needs. Jordan estimates that the cost of materials and labor needed to make speakers would be a total of $24 for each speaker. In addition, supervisory salaries, rent, and other manufacturing costs would be $182,000. Allocated facility-level costs would be $97,900. Required a. Determine the change in net income Jordan would experience if it decides to make the speakers. Zachary Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Zachary for $2.60 each. Required a. Calculate the total relevant cost. Should Zachary continue to make the containers? b. Zachary could lease the space it currently uses in the manufacturing process. If leasing would produce $11,900 per month, calculate the total avoidable costs. Should Zachary continue to make the containers
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