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: Reuben's Deli cost data Costs Amounts Increments Materials $0.24 per roll Labor 0.40 per roll Variable overhead 0.16 per roll Fixed overhead 0.20 per roll A) 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. What are the total relevant costs?
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: Reuben's Deli cost data Costs Amounts Increments Materials $0.24 per roll Labor 0.40 per roll Variable overhead 0.16 per roll Fixed overhead 0.20 per roll A) 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. What are the total relevant costs?
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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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:
Reuben's Deli cost data| Costs | Amounts | Increments |
|---|---|---|
| Materials | $0.24 | per roll |
| Labor | 0.40 | per roll |
| Variable overhead | 0.16 | per roll |
| Fixed overhead | 0.20 | per roll |
A) 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. What are the total relevant costs?
B) 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 are the total costs to purchase the rolls?
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