LO 13-3 Exercise 13-13 Outsourcing decision affected by opportunity costs Freeman Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 10,000 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,000 6,600 4,200 10,800 26,400 *One-third of these costs can be avoided by purchasing the containers. Baxi Container Company has offered to sell comparable containers to Freeman for $2.50 each. Required a. Should Freeman continue to make the containers? Support your answer with appropriate computations. b. Freeman could lease the space it currently uses in the manufacturing process. If leasing would produce $8,000 per month, would your answer to Requirement a be different? Explain.

Exercise 13-13 Outsourcing decision affected by opportunity costs Freeman Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 10,000 containers follows. Baxi Container Company has offered to sell comparable containers to Freeman for $2.50 each. Required a. Should Freeman continue to make the containers? Support your answer with appropriate computations. b. Freeman could lease the space it currently uses in the manufacturing process. If leasing would produce $8,000 per month, would your answer to Requirement a be different? Explain