In response to a growing awareness of gluten allergies, Pharoah 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:

		Chocolate Chip				Sugar				Oatmeal Raisin
Sales price			$ 130				$115				$120
Variable cost			$ 83				$ 74				$ 78
Fixed cost			18				13				21
Total cost			101				87				99
Gross profit			$ 29				$ 28				$ 21
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.)

Cookies		Contribution Margin
Chocolate Chip		$ enter a dollar amount rounded to 2 decimal places
Sugar		$ enter a dollar amount rounded to 2 decimal places
Oatmeal Raisin		$ enter a dollar amount rounded to 2 decimal places

What type of cookie would maximize the companys contribution margin?

select a type of cookie Chocolate ChipSugarOatmeal Raisin

eTextbook and Media

Assistance Used

Save for Later

Attempts: 0 of 3 used

Submit Answer

(b)

Assume that, based on typical customer demand, Pharoah will sell 11,300 batches of chocolate chip cookies, 7,300 batches of sugar cookies, and 9,300 batches of oatmeal raisin cookies. What will the companys contribution margin be?

The companys contribution margin

$ enter the companys contribution margin in dollars

eTextbook and Media

Save for Later

Attempts: 0 of 3 used

Submit Answer

(c)

Pharoahs flour supplier has announced a shortage of gluten-free flour. As a result, Pharoah will only be able to purchase 46,850pounds of flour. How many batches of each type of cookie should the company bake?

		Batches
Chocolate Chip		enter a number of batches
Sugar		enter a number of batches
Oatmeal Raisin		enter a number of batches

What will the companys contribution margin be?

The companys contribution margin

$ enter the companys contribution margin in dollars

eTextbook and Media

Save for Later

Attempts: 0 of 3 used

Submit Answer

(d)

Correct answer icon

Your answer is correct.

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

select an option NoYes

eTextbook and Media

Attempts: 2 of 3 used