What is Oat Treats' relevant cost? What does Simmons Cereal's offer cost? If Oat Treats accepts the offer, what will the effect on profit be? Incremental dollar amount = _________ Increase or Decrease
What is Oat Treats' relevant cost? What does Simmons Cereal's offer cost? If Oat Treats accepts the offer, what will the effect on profit be? Incremental dollar amount = _________ Increase or Decrease
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently:
The manufacturing
PLEASE NOTE: Costs per unit are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). All other dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
- What is Oat Treats' relevant cost?
- What does Simmons Cereal's offer cost?
- If Oat 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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