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?
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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 |
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?
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