In response to a growing awareness of gluten allergies Singl

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

Solution

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