Question
6...In response to a growing awareness of gluten allergies,CraneBakery tried using gluten-free flour in its three most popular cookies. After several attempts and a lot
6...In response to a growing awareness of gluten allergies,CraneBakery 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 $138 $133 $138
Variable cost $78 $82 $84
Fixed cost 19 16 20
Total cost 97 98 104
Gross profit $41 $35 $34
Pounds of flour 2.5 2.5 2
a. Assuming no raw material constraints and unlimited demand for cookies, calculate contribution margin per batch 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?
b. Assume that, based on typical customer demand, Crane will sell 13,100 batches of chocolate chip cookies, 9,100 batches of sugar cookies, and 11,100 batches of oatmeal raisin cookies. What will the company's contribution margin be?
c. Crane's flour supplier has announced a shortage of gluten-free flour. As a result,Cranewill only be able to purchase54,950pounds of flour. How many batches of each type of cookie should the company bake?
chocolate chip_____
sugar______
raisin cookie_____
What will the company's contribution margin be?________
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