Auntie Cookie Simulation


“The cost management system is a collection of tools and techniques that identify how management’s affect costs ( Horgren, C. Sundem, G., Stratton, W., Burgstahler, D., & Schatzberg, J. 2008, p. 136. Aunt Connie’s cookie company has been in business for 24 years. The company was created by Connie Rocho, and has always been a family- owned business. The company’s Chief Executive officer is Maria Villanueva, Connie’s niece. She has hired a new Chief Operating Officer (COO) to make decisions to maximize the company’s contribution margin and operating profits. She has given the COO total control of these operations. It would be beneficial to use cost accounting system to determine it product costs.
The Aunt Connie’s trademark has acquired success producing lemon crème and real mint cookies. The decisions to be made for the cookies include bulk order, competitor buyout, new product production, and capacity issues. Price increases for the cookies have decreased volume sales and revenue. The sales mix presently used my need adjusting to maximize production and meet demand. The first analysis to consider is the contribution margin data.
In its “Contribution margin” section (2003), In Wall Street Words states that the contribution margin is the sales minus the variable cost of producing the product. In the simulation the company is faced with the decision to cut prices to increase the sales volume. After calculating the comparison of the cookies the COO found that the contribution margin for the cookies was high enough to allow a price reduction.
The owner wants to increase marketing expenditures in addition to cutting prices to boost sales. This would be an investment in the products to reach more potential customers. By increasing market expenditures the company will build long- term equity for the cookies.
Connie cookies have been offered a special bulk order of 1,000,000 packs of cookies. The company would have to reduce the volume of another...