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Word Count: 1,695
Aunt Connies Cookies is a brand that is synonymous with delicious lemon cr and real mint cookies throughout the east and mid-west Maria Villanueva the grandniece of Connie Rochoa is now the CEO of the family-owned business She has appointed Team C as the COO Team C will make decisions with a view to maximize the firms contribution margin and operating profits Aunt Connies Cookies was approached to produce a bulk order of 1 million packs of real mint cookies to be completed in one months 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 creacuteme cookies are less than the real mint cookies She suggested that we reduce the current production volume for lemon creacuteme and produce more real mint to accommodate the bulk order In accepting the bulk order Marias suggestion should not be followed To maximize the operating product it is better to produce more of the lemon creacuteme cookies because it has a greater contribution margin per unit than the real mint This meant that the current production of real mint cookies should be reduced The bulk order should not be considered when the cookie production for both types of cookies exceeds production capacity This would mean that the company is incapable of completing the order Also Aunt Cookies should not consider accepting a bulk order if the asking sales price per unit for the order is at a price that would produce results where the contribution margin is less than the fixed costs Although the contribution margin may still be greater than zero it will still produce a loss for the company Therefore it would not be worth it to the company to fulfill the order The breakeven point for manufacturing lemon cr cookies in the newly acquired unit is 563000 packs The decision to manufacture 600000 packs resulted in operating
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