Aunt Connie
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Aunt Connie’s Cookies
University of Phoenix
Aunt Connie’s Cookies
Aunt Connie’s Cookies that produce real mint and lemon crème cookies throughout the east and mid-west. Maria Villanuea, owner, has appointed a chief operating officer (COO)to assist in making decisions to maximize the firm’s contribution margin and operating profits (University of Phoenix, 2009). How will the new COO successfully use the cost accounting system to help determine the company’s product costs?
As the COO begins their career at Aunt Connie’s Cookies they look at the operations cost in September. The price for Lemon Crème cookies and Real Mint Cookies have increase over the last serval months, this has decreased the volume and profit of the company. Past trends seem to indicate that price reduction spurs demand (University of Phoenix, 2009).
To maximize contribution margins and operating profits the unit prices for lemon crème and real mint cookies will have to be revised. As of now lemon crème is $2.00 per pack (800000 packs) by reducing this to $1.93 per pack (1012000 packs) will raise the revenue by $225000. This will also reduce the unit contribution margin by $0.04. By reducing the Real Mint cookies to $1.72 per pack (1056000 packs) from $1.80 per pack (780000 packs) will increase revenue by $412000. This will also reduce the unit contribution margin by $0.09 (University of Phoenix, 2009).
In October a bulk order for real mint cookies. The purchaser wants to buy 1 million cookies at $1.20 a pack. Currently Aunt Connie’s is producing 2000000 packs at $1.50. Though the contribution margin per pack for real mint cookies from the bulk order is less than your current contribution margin, profits from the untilization of idle capacity in the amount of 500000 packs will offset this deficit (University of Phoenix, 2009).
In November a competitor’s peanut butter cookies manufacturing unit has decided to sell due to ineffective processes and unskilled labor. The owner presents two...
University of Phoenix
Aunt Connie’s Cookies
Aunt Connie’s Cookies that produce real mint and lemon crème cookies throughout the east and mid-west. Maria Villanuea, owner, has appointed a chief operating officer (COO)to assist in making decisions to maximize the firm’s contribution margin and operating profits (University of Phoenix, 2009). How will the new COO successfully use the cost accounting system to help determine the company’s product costs?
As the COO begins their career at Aunt Connie’s Cookies they look at the operations cost in September. The price for Lemon Crème cookies and Real Mint Cookies have increase over the last serval months, this has decreased the volume and profit of the company. Past trends seem to indicate that price reduction spurs demand (University of Phoenix, 2009).
To maximize contribution margins and operating profits the unit prices for lemon crème and real mint cookies will have to be revised. As of now lemon crème is $2.00 per pack (800000 packs) by reducing this to $1.93 per pack (1012000 packs) will raise the revenue by $225000. This will also reduce the unit contribution margin by $0.04. By reducing the Real Mint cookies to $1.72 per pack (1056000 packs) from $1.80 per pack (780000 packs) will increase revenue by $412000. This will also reduce the unit contribution margin by $0.09 (University of Phoenix, 2009).
In October a bulk order for real mint cookies. The purchaser wants to buy 1 million cookies at $1.20 a pack. Currently Aunt Connie’s is producing 2000000 packs at $1.50. Though the contribution margin per pack for real mint cookies from the bulk order is less than your current contribution margin, profits from the untilization of idle capacity in the amount of 500000 packs will offset this deficit (University of Phoenix, 2009).
In November a competitor’s peanut butter cookies manufacturing unit has decided to sell due to ineffective processes and unskilled labor. The owner presents two...