Problem 1 a Reuben’s Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be? Relevant Costs Materials $0.24 Labor $0.40 Variable Overhead $0.16 Fixed Overhead (30% of $.20) $0.06 - Total Cost (30,000 Rolls Per Year) - Offer by Supplier $0.90 Total Cost (30,000 Rolls Per Year) - Continue Manufaturing $- Purchase from Supplier $- Increase/Decrease in Profit $-
Problem 1 a Reuben’s Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be? Relevant Costs Materials $0.24 Labor $0.40 Variable Overhead $0.16 Fixed Overhead (30% of $.20) $0.06 - Total Cost (30,000 Rolls Per Year) - Offer by Supplier $0.90 Total Cost (30,000 Rolls Per Year) - Continue Manufaturing $- Purchase from Supplier $- Increase/Decrease in Profit $-
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6EA: Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in...
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Problem 1 a | ||||
Reuben’s Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: | ||||
A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be? | ||||
Relevant Costs | ||||
Materials | $0.24 | |||
Labor | $0.40 | |||
Variable Overhead | $0.16 | |||
Fixed Overhead (30% of $.20) | $0.06 | |||
- | ||||
Total Cost (30,000 Rolls Per Year) | - | |||
Offer by Supplier | $0.90 | |||
Total Cost (30,000 Rolls Per Year) | - | |||
Continue Manufaturing | $- | |||
Purchase from Supplier | $- | |||
Increase/Decrease in Profit | $- | |||
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