Aunt Connies Cookies

Aunt Connie’s Cookies

Aunt Connie’s Cookies products are a brand famous for its delectable Lemon Cream and for her real mint cookies. Maria Villanueva started Aunt Connie’s Cookies in 1986 after a friend of Maria encourage her to take her small business and baking talent to the public. Since then Connie’s Cookies has become successful in producing her well-liked Lemon Cream and Real Mint cookies. As owner of this growing company Maria has been faced with several business decisions concerning her company. In order to meet the demand for her popular products and to continue to be profitable she had to consider the following: In order to accept the bulk order Maria needs to decide to either reduce one or both, the lemon or mint cookie production, to put the majority of effort into filling the bulk order. The best decision would be to take advantage to increase operating profits. It would make perfectly good business sense to produce the product that would give the highest unit contribution margin. Therefore by maintaining lemon cookies production at the same level there would be no revenue lost and the increased demand for Real Mint Cookies would provide a greater profits than under normal production situation. Maria was also faced with whether to preserve or to replace equipment. The lower variable manufacturing cost due to the purchase of new production equipment should counterbalance the cost of the equipment (Phoenix, 2009). When a company has limited resources such as limited floor space machine and man hours or raw ingredients, the manager must decide to sell or produce the product that would generate the greatest contribution margin per unit. According Marshall, McManus, and Viele contribution margin is defined as the contribution to fixed expense and operating income from the sale of product or provision of service (Marshall, 2004). Lastly, Maria’s decision to eradicate an unprofitable business segment is among the most important decision that...