Thornton Electronics currently produces the shipping containers It uses to deliver the electronics products It sells. The monthly cost ofproducing 9,100 containers follows.Unit-level materialsUnit-level laborUnit-level overheadProduct-level costs*Allocated facility-level costs$ 5,1006,4003,3009,90028,000*One-third of these costs can be avoided by purchasing the containers.Russo Container Company has offered to sell comparable containers to Thornton for $2.60 each.Requireda. 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 $12,100 per month, calculatethe total avoidable costs. Should Thornton continue to make the containers?a. Total relevant costa. Should Thornton continue to make the containers?b. Total avoidable costb. Should Thornton continue to make the containers?

It's important to note that relevant costs are future-oriented and differ based on the decision at…

Answered: Thornton Electronics currently produces…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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Vernon 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 $5,700 6,500 3,200 8,400 27,100 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Vernon for $2.60 each. Required a. Calculate the total relevant cost. Should Vernon continue to make the containers? b. Vernon could lease the space it currently uses in the manufacturing process. If leasing would produce $12,700 per month, calculate the total avoidable costs. Should Vernon continue to make the containers? a. Total relevant cost a. Should Vernon continue to make the containers? b. Total avoidable cost b. Should Vernon continue to make the containers?
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Jordan 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 $ 5,700 6,800 3,900 8,100 27,200 One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Jordan for $2.90 each. Required a. Calculate the total relevant cost. Should Jordan continue to make the containers? b. Jordan could lease the space it currently uses in the manufacturing process. If leasing would produce $12.300 per rhonth, calculate the total avoidable costs. Should Jordan continue to make the containers? a. Total relevant cost Should Jordan continue to make the containers? b. Total avoidable cost Should Jordan continue to make the containers?
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Rundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required a. Calculate the total relevant cost. Should Rundle continue to make the containers? b. Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $11,600 per month, calculate the total avoidable costs. Should Rundle continue to make the containers? Answer is complete but not entirely correct. $ a. Total relevant cost a. Should Rundle continue to make the containers? b. Total avoidable cost b. Should Rundle continue to make the containers? 190.650,000 Yes $24,180,000 $ 5,200 6,100 4,000 7,800…
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Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $1.80 per switch. Vista’s CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 141,450 $ 188,325 Variable cost per switch 0.57 0.25 Required: For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? What volume level would produce the same total costs regardless of the machine purchased? What is the most profitable alternative for producing 155,000 switches per year and what is the total cost of that alternative
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