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$13,000Direct labor4,900Manufacturing overhead7,000Total$24,900The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs.A. Calculate the differential cost of Acme?$fill in the blank 1B. Should Almond Treats make or buy the almond cereal? Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company itstop 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$13,000Direct labor4,900Manufacturing overhead7,000Total$24,900The manufacturing overhead consists of $2,000 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?

Differential Cost: It is the difference between the cost of two alternative decisions.

Answered: Almond Treats manufactures various…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 7EA: Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has...

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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 $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	4,900
Manufacturing overhead	7,000
Total	$24,900

The manufacturing overhead consists of $2,000 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?

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
4,900
Manufacturing overhead
7,000
Total
$24,900
The manufacturing overhead consists of $2,000 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?

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