Aunt Connie - Aunt Connies Cookies 1 Aunt Connies Cookies...

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Aunt Connie’s Cookies 1 Aunt Connie’s Cookies Simulation Carl R. Foster June 15, 2010 ACC 561 University of Phoenix
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Aunt Connie’s Cookies 2 Aunt Connie’s Cookies Simulation Aunt Connie's Cookies is synonymous with delicious lemon crème and real mint cookies throughout the east and mid-west. Maria Villanueva, is now the CEO of the family-owned business. She has appointed me as the COO. I will make decisions with a view to maximizing the company’s contribution margin and operating profits. Aunt Connie's Cookies was approached to produce a bulk order of 1 million packs of real mint cookies to be completed in one month's time. The company needed to decide if completing this order will be a good option. Maria stated that the total contribution margin and operating profit from the lemon créme cookies are less than the real mint cookies. She suggested that we reduce the current production volume of lemon crème cookies because it has a greater contribution margin per unit than the real mint. The bulk order should not be considered when the cookie production for both types of cookies exceeds production capacity. Exceeding capacity means an inability to complete the order. Aunt Connie’s should not consider accepting a bulk order if the asking sales price per unit for the product is at a price where the result is the contribution margin is less than the fixed costs. 563,000 packs of lemon crème cookies is the breakeven point for the unit recently acquired. The decision to manufacture 600,000 packs resulted in operating profits from the new unit, which met the exact monthly production target for lemon crème cookies. This has increased overall profits. If the breakeven volume of lemon crème cookies is increased to 650,000 packs and continuing to make peanut butter cookies would not have been profitable the organization operation may result in operating profits. However, in doing so, forces the existing unit to reduce volumes for lemon crème cookies from their original status of exceeding the monthly production
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Aunt Connie - Aunt Connies Cookies 1 Aunt Connies Cookies...

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