Auntie Annies Cookies
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Running head: AUNTIE CONNIE'S COOKIES
Auntie Connie's Cookies
Accounting for Decision Making
ACC/561
January 30, 2011
Auntie Connie's Cookies
Connie’s cookie is a well established business since 1986, Connie’s Cookies Incorporated is best known for both lemon crème and real mint cookies. The new Chief Operating Officer (COO) has the responsibility to make a decision to maximize contribution margin and the company’s profits. This paper will reference the decisions made in the Aunt Connie’s Cookies simulation as well as, if cost accounting will enable the company to be successful (University of Phoenix 2011).
The simulation presented several areas requiring decisions that affected the overall profitability of Aunt Connie’s Cookies business. One of the primary concerns was in reviewing the unit price per cookie as consumer trends suggested that a decrease in volume recently indicated pricing concerns. Past trends proved that volume increased as unit sale prices decreased. A decision in reducing prices in order to achieve higher volume would result in higher profitability as long as the sale price per unit did not drop significantly and cause the contribution margin to be less than the costs. If the contribution margin was greater than the fixed costs the company would maintain profitability.
As part of the simulation the option to for a bulk order was presented, and by accepting the order and reducing the current volume for the real mint cookies proved to be a wise decision by the COO. Maximizing operating profits is better to produce more of the product that has a greater contribution margin per unit of the lemon cookies.
Aunt Connie’s Cookies can use cost accounting to determine the product cost by implementing cost volume profit analysis (CVP). CVP is the study of output volume on revenue, expenses and net income (Horngren, 2008). Using this analysis the company is able to use data, to determine the break-even point for selected price points, as...
Auntie Connie's Cookies
Accounting for Decision Making
ACC/561
January 30, 2011
Auntie Connie's Cookies
Connie’s cookie is a well established business since 1986, Connie’s Cookies Incorporated is best known for both lemon crème and real mint cookies. The new Chief Operating Officer (COO) has the responsibility to make a decision to maximize contribution margin and the company’s profits. This paper will reference the decisions made in the Aunt Connie’s Cookies simulation as well as, if cost accounting will enable the company to be successful (University of Phoenix 2011).
The simulation presented several areas requiring decisions that affected the overall profitability of Aunt Connie’s Cookies business. One of the primary concerns was in reviewing the unit price per cookie as consumer trends suggested that a decrease in volume recently indicated pricing concerns. Past trends proved that volume increased as unit sale prices decreased. A decision in reducing prices in order to achieve higher volume would result in higher profitability as long as the sale price per unit did not drop significantly and cause the contribution margin to be less than the costs. If the contribution margin was greater than the fixed costs the company would maintain profitability.
As part of the simulation the option to for a bulk order was presented, and by accepting the order and reducing the current volume for the real mint cookies proved to be a wise decision by the COO. Maximizing operating profits is better to produce more of the product that has a greater contribution margin per unit of the lemon cookies.
Aunt Connie’s Cookies can use cost accounting to determine the product cost by implementing cost volume profit analysis (CVP). CVP is the study of output volume on revenue, expenses and net income (Horngren, 2008). Using this analysis the company is able to use data, to determine the break-even point for selected price points, as...