In response to a growing awareness of gluten allergies, Sandhill 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			$ 135				$ 130				$ 135
Variable cost			$ 79				$ 77				$ 80
Fixed cost			16				15				19
Total cost			95				92				99
Gross profit			$ 40				$ 38				$ 36
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 SugarOatmeal RaisinChocolate Chip

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(b)

Assume that, based on typical customer demand, Sandhill will sell 12,800 batches of chocolate chip cookies, 8,800 batches of sugar cookies, and 10,800 batches of oatmeal raisin cookies. What will the companys contribution margin be?

The companys contribution margin

$ enter the companys contribution margin in dollars

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(c)

Sandhills flour supplier has announced a shortage of gluten-free flour. As a result, Sandhill will only be able to purchase 53,600 pounds 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

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(d)

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

select an option NoYes