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...



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




























CostsAmountsIncrements
Materials$0.24per roll
Labor0.40per roll
Variable overhead0.16per roll
Fixed overhead0.20per 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?



Jun 09, 2022
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