Aunt Connie Cookie Company

Aunt Connie’s Cookie Company Simulation

Janettie Clemens

Accounting/561

November 16, 2010

Curtis Binney

Aunt Connie’s Cookie Simulation

Aunt Connie’s Cookie Company became a successful business producing real mint cookies and lemon crème since 1986. The company is currently operated by grandniece Maria Villanueva (Chief Executive) and Connie Rough (Owner). To assist with decision-making an accountant was elected to join the team. The new accountant will take over in September and will then begin to overlook and analyze data to make choices to maintain success. This paper will entail some of the options for the price share to distributors to advertising budget. While evaluating the data, the accountant realizes that there is a decrease in volume of sales which is due to the price of the cookies rising over the last several months.

The step that should be made first is to establish a better price of the cookies which will then increase the volume of sales. Since Lemon crème is the company’s most profit reliable product, the accountant wants to lower the price per box from $2.00 to $1.93. The lowered price will result in an increase of sales and revenue. Where the company sold 725,000 packs of cookies or $1,450,000 in revenue the new lower priced Lemon crèmes will sell 992 packs of cookies or $1,915,000 (revenue). The accountant will also want to decrease the price of real mint cookies from $1.80 to $1.72 per pack. This change will increase the sales of the product from 822 packs of cookies to 968 packs of cookies. The amount of share to distributors will now need to be determined. Increasing the lemon crème share from $.06 to $0.10 will lower the contribution margin but the boost in revenue will help offset this affect. The real mint cookies share cost was not altered because they did not produce optimal profits.

The company chooses to increase the advertising budget for both brands of cookies. The suggested increase is 50%. The outcome of...