Aunt Connie's Cookies

Aunt Connie’s Cookies was established in 1986. Aunt Connie loved to make cookies and people enjoyed eating them so much that one day she was asked to make cookies for an annual fundraiser. The host of the fundraiser at the time was willing to purchase a batch of 500 cookies for $50 dollars. Instead, Aunt Connie offered them a much better deal of 600 cookies at the price of $55 dollars. The group of fundraisers was so happy because they thought they were getting the better deal. However, it was Aunt Connie that was going to be the one to profit off the sale. Aunt Connie figured that she would have a $20 dollar operating cost whether she made 300 or 600 cookies. By increasing the price $5 extra dollars she would still be able to cover all of her expenses and also be able to give the fundraiser more cookies. In the simulation of Aunt Connie’s Cookies it covers how changes in selling price, cost, and volume affect the bottom line. (University of Phoenix, 2009).

There were several decisions that affected the overall profitability of Aunt Connie’s Cookies. The first issue was to look at the price increases for the lemon crème and the real mint cookies. This increase in price reflects a decrease in volume, which is a major concern for the company. Past trends proved that volume increased as unit sale prices decreased. In deciding to reduce price in order to achieve higher volume would result in higher profitability and a successful longevity for Aunt Connie’s Cookies. If the contribution margin were greater than the fixed costs the company would maintain profitability.

A bulk order request also comes in for the real mint cookies. Unfortunately, this is not an optimal decision for the Aunt Connie’s Cookie Company as the lemon cream cookie has a higher contribution margin than the real Mint. The choice to fill this bulk order would result in a further decrease in revenue for the Aunt Connie’s Cookie Company. Perhaps Aunt Connie’s could negotiate a higher rate for...