In response to a growing awareness of gluten allergies, Singletary Cookie Compan

Question

In response to a growing awareness of gluten allergies, Singletary Cookie Company tried using gluten-free flour in its three most popular cookies. After several attempts and a lot of inedible cookies, the company perfected new recipes that yield delicious gluten-free cookies. The costs of producing a batch of 100 cookies are as follows: Assuming no raw material constraints and unlimited demand for rookies. Calculate contribution margin for Chocolate Chip, Sugar, Oatmeal Raisin cookies. (Round answers to 2 decimal places, e.g. 52.75.) What type of cookie would maximize the company's contribution margin?

Explanation / Answer

Ans-

If there is no constraint on raw material Chocolate chips would be most profitable in terms of contribution margin.

Chocolate Sugar Oatmeal Chip Raisin Sales 127.6 108.8 129.3 Less Variable cost 79 61 87 contribution Margin 48.6 47.8 42.3 Less Fixed Cost 18 13 19 Profit 30.6 34.8 23.3

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