Based on the way allocated expenses are divided among the divisions, what do you think will happen to the Average division if the company continues to prepare financial statements in this way, assuming Weak was dropped?

1. Assuming no raw material constraints and unlimited demand for cookies, calculate contribution margin per batch for Chocolate Chip, Sugar, Oatmeal Raisin cookies.

What type of cookie would maximize the company's contribution margin?

2. Assume that, based on typical customer demand, Crane will sell 10,900 batches of chocolate chip cookies, 6,900 batches of sugar cookies, and 8,900 batches of oatmeal raisin cookies. What will the company's contribution margin be?

3. Crane's flour supplier has announced a shortage of gluten-free flour. As a result, Crane will only be able to purchase 45,050 pounds of flour. How many batches of each type of cookie should the company bake?

What will the company's contribution margin be?

4. If Crane uses gluten-free flour in other products, will the allocation you recommend in part (c) change?