(a) LINK TO TEXT (b) LINK TO TEXT (c) In response to a growing awareness of glut
ID: 2454150 • Letter: #
Question
(a)
LINK TO TEXT
(b)
LINK TO TEXT
(c)
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 Sugar Oatmeal
Raisin Sales price $127.60 $108.80 $129.30 Variable cost $79 $61 $87 Fixed cost 18 13 19 Total cost 97.00 74.00 106.00 Gross profit $30.60 $34.80 $23.30 Pounds of flour 2 2 1.5
Explanation / Answer
a. computation of contribution margin
Contribution = sales - variable cost
Chocolate chip :
Contribution = 127.60 - 79 = 48.6
Sugar:
Contribution = 108.80 - 61 = 47.8
Oatmeal Raisin :
Contribution = 129.30 - 87 = 42.3
Chocolate chip is the highest contribution.
b. Chocolate chip :
Contribution = 11700 * 127.6 - 11700 *79
= 1492920 - 924300 = 568620
Sugar:
Contribution = 7700 * 108.80 - 7700 * 61
= 837760 - 469700
= 368060
Oatmeal raisin :
Contribution = 9700 * 129.30 - 9700 *87
= 1254210 - 843900
= 410310.
c. Chocolate chip has 16931 batches
Sugar has 12917 batches
Oatmeal has 18502 batches
Total sales price = 127.6 + 108.80 + 129.30 = 365.7
Total variable cost = 79 + 61 + 87 = 227
Companys contribution margin = 365.7 - 227 = 138.7.
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