Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 37,867 rolls annually in the production of deli sandwiches. The costs to make the rolls are: Reuben's Deli cost data Costs Amounts Increments Materials $0.36 per roll Labor 0.52 per roll Variable overhead 0.17 per roll Fixed overhead 0.37 per roll A potential supplier has offered to sell Reuben the rolls for $0.83 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? Do not round until the final calculation - then round to the nearest penny, two decimal places. If the effect is negative, use a dash - not parentheses ( ).

Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 37,867 rolls annually in the production of deli sandwiches. The costs to make the rolls are: Reuben's Deli cost data Costs Amounts Increments Materials $0.36 per roll Labor 0.52 per roll Variable overhead 0.17 per roll Fixed overhead 0.37 per roll A potential supplier has offered to sell Reuben the rolls for $0.83 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? Do not round until the final calculation - then round to the nearest penny, two decimal places. If the effect is negative, use a dash - not parentheses ( ).

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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