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? . Please note: Your answer is either "Increase" or "Decrease" - capital first letters and no quotes.
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
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? . Please note: Your answer is either "Increase" or "Decrease" - capital first letters and no quotes.
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