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 prod-uction of 20,000 pounds of almond cereal: Direct material $13,000 Direct labor 5,000 Manufacturing overhead7,000 The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs. Should Almond Treats make or buy the almond cereal?

Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…

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 prod-
uction of 20,000 pounds of almond cereal:
	Direct material		$13,000
	Direct labor		5,000
	Manufacturing overhead	7,000
The manufacturing overhead consists of $2,000 of variable costs with the balance being
allocated to fixed costs. Should Almond Treats make or buy the almond cereal?

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