In response to a growing awareness of gluten allergies, Oriole Bakery tried usin
ID: 2528837 • Letter: I
Question
In response to a growing awareness of gluten allergies, Oriole Bakery 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:
1.5
Oriole’s flour supplier has announced a shortage of gluten-free flour. As a result, Oriole will only be able to purchase 36,200 pounds of flour.
How many batches of each type of cookie should the company bake?
What will the company’s contribution margin be?
Chip Sugar Oatmeal
Raisin Sales price $131.20 $108.60 $128.00 Variable cost $82 $60 $86 Fixed cost 16 15 19 Total cost 98.00 75.00 105.00 Gross profit $33.20 $33.60 $23.00 Pounds of flour 2 2
1.5
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Chocolate chip Sugar Oatmeal Raisin Sales price per unit 131.20 108.60 128.00 Variable cost per unit 82.00 60.00 86.00 contribution margin per unit 49.20 48.60 42.00 Pounds of flour 2.00 2.00 1.50 Contribution margin per pound of flour 24.60 24.30 28.00 Ranking 2.00 3.00 1.00 Company should use gluten-free flour for producing Oatmeal raisin as it has highest contribution margin per pound and there is no maximum demand provided for the products Maximum pounds available 36,200.00 No of batches of 100 cookies = 36200 / 1.5 24,133.33 Amount of contribution = 42* 24,133.33 1,013,600.00
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