Winton Corporation Currently Makes Rolls for Deli Sandwiches It Produces

Multiple Choice

Winton Corporation 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 given below: $\begin{array}{ll}\text { Materials } & \$ 0.24 \text { per roll } \\\text { Labor } & \$ 0.40 \text { per roll } \\\text { Variable overhead } & \$ 0.16 \text { per roll } \\\text { Fixed overhead } & \$ 0.20 \text { per roll }\end{array}$ A potential supplier has offered to sell Winton the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Winton accepts the offer, what will the effect on profit be?

A) $1,200 decline in profit
B) $1,200 increase in profit
C) $3,000 decline in profit
D) $3,000 increase in profit