Accounting

In this scenario, we have to determine whether or not to go with Maria’s various suggestions to increase or decrease production, decrease the prices or to fulfill a bulk order which would decrease the capacity of the other retail sales but would allow the company to run at full capacity.   We have been given business information as well as comparison data to make decision with respect to consideration of the bulk order, consideration of a purchase from a competitor and reducing prices to increase demands.   With this information, we have to make the following decisions: (1) Make or buy; (2) Sell or Process More; (3) Retain the equipment; (4) Get into a different business segment such as the peanut butter cookies; and (4) Allocate more production to limited resources.   With regards to the bulk sale, I feel that this is not the best scenario for the company, to maximize the operating product; the company should make more of the lemon crème cookies because it has a greater contribution margin.   The bulk order should not be considered especially if the other cookie orders are running at full capacity as it would exceed production capacity.   It would not be in the best interest to accept the bulk order of the cookies if it is less per unit sale.   This would mean that the contribution margin is less than the fixed costs.   Further, even if the contribution margin is greater than zero we can still see that it will be a loss to the company.   For this reason, I choose to not go with the bulk order.   There are three points to consider in cost accounting which include, fixed costs, variable costs and breakeven points.   These are part of the details that are necessary when it comes to running a business.   In this scenario, Aunt Connie’s Cookies can use the accounting system to determine where the profitable points will be by evaluating the relationship between cost, volumes, and profits.   In order to make the best decisions for the company it would be best to review past sales...