Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the
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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:
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?
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To determine the effect on profit we need to compare the current situation where Reubens Deli makes the rolls with the situation where they purchase t...View the full answer
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