Eastwood Cake Factory sells chocolate cakes, birthday cakes, and specialty cakes. The factory is experiencing a bottleneck and is trying to determine which cake is most profitable. Even though Eastwood may have to limit its orders, it is concerned about customer service and satisfaction. Line Item Description Chocolate Cake Birthday Cake Specialty Cake Sales price $20.00 $45.00 $60.00 Variable cost per cake $5.00 $12.00 $20.00 Hours needed to bake, frost, and decorate 1 hour 2.5 hours 2 hours a. Compute the contribution margin per hour per cake. If required, round your answers to two decimal places. Cake Amount Chocolate cake $fill in the blank 1 Birthday cake $fill in the blank 2 Specialty cake $fill in the blank 3 b. Determine which cakes the company should try to sell more of first, second, and then last. Rank Cake 1st: 2nd: 3rd:

Eastwood Cake Factory sells chocolate cakes, birthday cakes, and specialty cakes. The factory is experiencing a bottleneck and is trying to determine which cake is most profitable. Even though Eastwood may have to limit its orders, it is concerned about customer service and satisfaction. Line Item Description Chocolate Cake Birthday Cake Specialty Cake Sales price $20.00 $45.00 $60.00 Variable cost per cake $5.00 $12.00 $20.00 Hours needed to bake, frost, and decorate 1 hour 2.5 hours 2 hours a. Compute the contribution margin per hour per cake. If required, round your answers to two decimal places. Cake Amount Chocolate cake $fill in the blank 1 Birthday cake $fill in the blank 2 Specialty cake $fill in the blank 3 b. Determine which cakes the company should try to sell more of first, second, and then last. Rank Cake 1st: 2nd: 3rd:

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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Line Item Description	Chocolate Cake	Birthday Cake	Specialty Cake
Sales price	$20.00	$45.00	$60.00
Variable cost per cake	$5.00	$12.00	$20.00
Hours needed to bake, frost, and decorate	1 hour	2.5 hours	2 hours

Cake	Amount
Chocolate cake	$fill in the blank 1
Birthday cake	$fill in the blank 2
Specialty cake	$fill in the blank 3

Rank	Cake
1st:
2nd:
3rd:

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