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Omron 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
Omron 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 $ 7,500 8,250 5,250 13,500 33,000 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Omron for $3.00 each. Required a. Calculate the total relevant cost. Should Omron continue to make the containers? b. Omron could lease the space it currently uses in the manufacturing process. If leasing would produce $8,000 per month, calculate the total avoidable costs. Should Omron continue to make the containers? a. Total relevant cost b. Should Omron continue to make the containers? Total avoidable cost Should Omron continue to make the containers
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