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	$12,900
Direct labor	5,000
Manufacturing overhead	6,900
Total	$24,800

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?

Make/Buy

Show Me How

Ralston Dairy gathered this data about the two products that it produces:

Products	Current Sales Value			Estimated Added Processing Costs			Sales Value If Processing Further
Frozen yogurt		$8,100			$1,800			$11,000
Ice cream		12,200			6,800			18,200

Which of the products should be processed further?

Frozen yogurtIce cream

because profits

increase bydecrease by

$fill in the blank 3.