FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
$13,100
Direct labor
5,000
Manufacturing overhead
6,900
Total
$25,000
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?
B. Should Almond Treats make or buy the almond cereal?
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Transcribed Image Text: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 $13,100 Direct labor 5,000 Manufacturing overhead 6,900 Total $25,000 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? B. Should Almond Treats make or buy the almond cereal? Make v Feedback
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