Answer:
Explanation:
Production level costs are 2/3 unavoidable, hence not relevant. Only 1/3 is taken of prodyction level costs
Total avoidable costs:
Unit-level materials 5,600
Unit-level labor 6,900
Unit-level overhead 3,600
Product level costs (8400/3) 2800
Total avoidable costs 18,900
Should Stuart continue to make the containers?
Yes, because cost of buying is more than producing (22,750>18,900). Purchase price = 2.50*9100 = 22,750
If leasing would produce $11,100 per month, calculate the total avoidable costs.
Total avoidable costs = 11,100+18,900 = $30,000
Should Stuart continue to make the containers?
No, because cost of producing 30,000 is higher than cost of buying.
