Reference no: EM133058081

Questions -

Q1. 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:

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 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?

Q2. 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:

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 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?

Q3. 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:

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 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?