Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling cereal at a price of $24,252 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: Almond Treats cost data Costs Amounts Direct material $12,592 Direct labor 5,810 Manufacturing overhead 8,638 The manufacturing overhead consists of $2,424 of variable costs with the balance being allocated to fixed costs. If Almond Treats buys the cereal, what is the effect on profit? If the effect is negative, use a dash - not parentheses ( ).

Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling cereal at a price of $24,252 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: Almond Treats cost data Costs Amounts Direct material $12,592 Direct labor 5,810 Manufacturing overhead 8,638 The manufacturing overhead consists of $2,424 of variable costs with the balance being allocated to fixed costs. If Almond Treats buys the cereal, what is the effect on profit? If the effect is negative, use a dash - not parentheses ( ).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Brightstone Tire and Rubber Company has capacity to produce 153,000 tires. Brightstone presently produces and sells 117,000 tires for the North American market at a price of $91 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 18,000 tires for $75.15 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $35 Direct labor 13 Factory overhead (60% variable) 21 Selling and administrative expenses (40% variable) 18 Total $87 Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $5 per tire. In addition, Euro has made the order conditional on receiving European safety…
Hardev
Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling cereal at a price of $22,000 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: Direct material $13,100 Direct labor 5,000 Manufacturing overhead 6,900 Total $25,000 The manufacturing overhead consists of $2,200 of variable costs with the balance being allocated to fixed costs. A. Calculate the differential cost of Acme? B. Should Almond Treats make or buy the almond cereal? Make v Feedback
6. Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling cereal at a price of $22,000 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: Direct material $13,000 Direct labor 5,000 Manufacturing overhead 7,000 Total 25,000 The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs. PLEASE NOTE: Costs per unit are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). What is Almond Treats' relevant cost? What does Acme's offer cost? If Almond Treats accepts the offer, what will the effect on profit be? Incremental dollar amount = . Increase or Decrease? .…
Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total (a) $3.00 Total relevant cost to make $ 11.00 Net relevant cost to buy $ 8.00 Cullumber, Inc., has offered to sell 7,300 units f part 231 to Blue for $33 per unit. If Blue accepts Cullumber's offer, its freed-up facilities could be used to earn $10,700 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% of the fixed overhead applied to part 231. 10.00 $32.00 Calculate total relevant cost to make and net cost to buy.
Cowboy Ice Cream Company (CIC) produces ice cream bars that it markets through a variety of grocery stores. It makes the ice cream bars in batches of 2,000 units. CIC produced 36,000 ice cream bars during the prior accounting period. The cost of producing the ice cream bars is shown below. Materials cost ($29 per unit x 36,000) Labor cost ($26 per unit x 36,000) Manufacturing supplies ($9 x 36,000) Batch-level costs (18 batches at $6,000 per batch) Product-level costs $1,044,000 936,000 324,000 108,000 300,000 370,000 Facility-level costs Total costs $3,082,000 Cost per unit = $3,082,000 + 36, 000 = $85.61 Required a. OnCue has offered to buy a batch of 500 ice cream bars for $68 each. CIC's normal selling price is $93 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should CIC accept the special order? b. OnCue offered to buy a batch of 2,000 ice cream bars for $68 per unit, calculate the relevant cost per unit for the…
Glassworks makes products for the sandblasting industry. One of the products they make is bags of high-grade sandblasting media that is made from a combination of quartz-sand and recycled ground-glass (cullet). Standard costs and quantities to produce one bag of sandblasting media are as follows: Quantity Cost Quartz-sand 20 kg $4.00 Cullet 5 kg $3.00 80,000 bags of sandblasting media were produced. Actual purchases and inventories were: Beginning Ending Purchases Purchases Inventory Inventory (in kg) ( in $) Quartz-sand 0 kg 0 kg 1,610,000 kg $322,161 Cullet 0 kg 120,000 kg 550,000 kg $286,000 Required: Calculate the following variances: a)Total direct material efficiency variance. b)Total direct material mix variance.…
Brightstone Tire and Rubber Company has capacity to produce 272,000 tires. Brightstone presently produces and sells 208,000 tires for the North American market at a price of $111 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 32,000 tires for $91.65 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $42 Direct labor 16 Factory overhead (60% variable) 26 Selling and administrative expenses (40% variable) 22 Total $106 Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $6 per tire. In addition, Euro has made the order conditional on receiving…
a) Almond Delites manufactures various types of biscuits. FMF Biscuits Ltd has approached Almond Delites with a proposal to sell the company its top-selling biscuit at a price of $22 000 for 20 000 units. The costs shown are associated with the production of 20 000 units of almond biscuits: Direct materials: $12,000 Direct labor: $5,000 Variable overhead: $8,000 Fixed overhead: $25,000 The manufacturing overhead consists of $2 000 of variable costs, with the balance being allocated to fixed costs. Assume that 40% of the fixed costs would be avoidable if the almond biscuits were purchased externally rather than produced internally. Required: i)Should Almond Delites make or buy the almond biscuit? ii) What qualitative factors should Almond Delites consider before making its decision?
Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling cereal at a price of $21,800 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: Direct material $13,000 Direct labor 5,100 Manufacturing overhead 7,100 Total $25,200 The manufacturing overhead consists of $2,200 of variable costs with the balance being allocated to fixed costs. A. Calculate the differential cost of Acme? $fill in the blank 1 B. Should Almond Treats make or buy the almond cereal? Make or buy?
GEM Limited has a single product Flicks. The company normally produces and sells 80,000units of Flicks each year at a price of $240 per unit. The company’s unit costs at this level ofactivity are as follow:Direct material $57.00Direct labor 60.00Variable manufacturing overhead 16.80Fixed manufacturing overhead 30.00Variable selling and administrative costs 10.20Fixed selling and administrative costs 27.00 Total unit cost $201.00GEM has sufficient capacity to produce 100 000 units of Flicks a year without any increase infixed manufacturing overhead.Required:(a) GEM has an opportunity to sell 10 000 units to an overseas customer. Import duties andother special costs associated with this order would total $42 000. The only selling coststhat would be associated with the order would be a shipping cost of $9.00 per unit.What would be the minimum acceptable unit price for GEM to consider this order?(hint: GEM would not accept the order if it would reduce the…
Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 20,000 tires for $116 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $56 Direct labor 22 Factory overhead (60% variable) 25 Selling and administrative expenses (45% variable) 26 Total $129 Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.50 per tire. In addition, Euro has made the order conditional on receiving…