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: Chocolate Chip $131.60 Oatmeal Sugar $110.60 $62 14 76.00 $34.60 Raisin Sales price Variable cost Fixed cost Total cost Gross proft Pounds of flour $130.60 $88 19 107.00 $23.60 1.5 $82 17 99.00 $32.60 (a) Your answer is correct Collapse question part Assuming no raw material constraints and unlimited demand for cookies Calculate contribution margin for Chocolate Chip, Sugar, Oatmeal Raisin cookies. (Round answers to 2 decimal places, e.g. 52.75.) Cookies Chocolate Chip Sugar Contribution Margin 49.60 48.60 Oatmeal Raisin 42.60 What type of cookie would maximize the company's contribution margin? Chocolate Chip

Explanation / Answer

Calculations Particulars Chocolate Chip Sugar Oatmeal Raisin Total A Contribution per unit 49.6 48.6 42.6 B Pounds of flour per unit 2 2 1.5 C = A / B Contribution per pound of flour 24.8 24.3 28.4 D = Highest first Rank 2 3 1 E Production requirement 11400 7400 9400 F = E x B Flour Requirement 22800 14800 14100 51700 G = Balance remaining allocated to Sugar Allocation on basis of rank 22800 9800 14100 46700 H = G / B Production 11400 4900 9400 I = H x A Contribution 565440 238140 400440 1204020

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