In response to a growing awareness of gluten allergies, Sheridan 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			$132				$127				$132
Variable cost			$82				$82				$84
Fixed cost			18				13				20
Total cost			100				95				104
Gross profit			$32				$32				$28
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 company's contribution margin?

select a type of cookie Oatmeal RaisinSugarChocolate Chip

(b)

Assume that, based on typical customer demand, Sheridan will sell 12,500 batches of chocolate chip cookies, 8,500 batches of sugar cookies, and 10,500 batches of oatmeal raisin cookies. What will the company's contribution margin be?

The company's contribution margin

$enter the company's contribution margin in dollars

(c)

Sheridan's flour supplier has announced a shortage of gluten-free flour. As a result, Sheridan will only be able to purchase 52,250 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 company's contribution margin be?

The company's contribution margin

$enter the company's contribution margin in dollars

(d)

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

select an option NoYes