The Stewart Cake Factory sells chocolate cakes, birthday decorated cakes, and specialty cakes. The factory is experiencing a bottleneck and is trying to detemine which cake is more profitable. Even though the company may have to limit the orders that it takes, they are concemed about customer service and satisfaction. Chocolate Cake $25.00 Birthday Cake $45.00 Specialty Cake $30.00 Sales price Variable cost per cake Hours needed to bake, frost, and decorate $5.00 $12.00 $10.00 1 hour 2.5 hours 2 hours

The Stewart Cake Factory sells chocolate cakes, birthday decorated cakes, and specialty cakes. The factory is experiencing a bottleneck and is trying to detemine which cake is more profitable. Even though the company may have to limit the orders that it takes, they are concemed about customer service and satisfaction. Chocolate Cake $25.00 Birthday Cake $45.00 Specialty Cake $30.00 Sales price Variable cost per cake Hours needed to bake, frost, and decorate $5.00 $12.00 $10.00 1 hour 2.5 hours 2 hours

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EB: Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the...

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Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?
Blossom’s flour supplier has announced a shortage of gluten-free flour. As a result, Blossom will only be able to purchase 44,600pounds of flour.How many batches of each type of cookie should the company bake? The company’s contribution margin?
Burger Doodle is a fast-food restaurant that processes an average of 680 food orderseach day. The average cost of each order is $6.15. Four percent of the orders areincorrect, and only 10% of the defective orders can be corrected with additional fooditems at an average cost of $1.75. The remaining defective orders have to be thrownout.a. Compute the average product cost.b. In order to reduce the number of wrong orders, Burger Doodle is going to investin a computerized ordering and cash register system. The cost of the system willincrease the average order cost by $0.05 and will reduce defective orders to 1%.What is the annual net cost effect of this quality-improvement initiative?c. What other indirect effects on quality might be realized by the new computerizedorder system?
A small company manufactures a certain item and sells it online. The company has a business model where the cost, C in dollars, to make x items is given by the equation C = 20/3 x + 50. The revenue R , in dollars , made by selling x items is given by the equation R = 10x. How many items must the company sell in order for the cost to equal their revenue?
Sleepy Time is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Sleepy Time fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales price per unit $ 3,250.00 Per-unit variable costs: Invoice cost 2,468.80 Sales commissions 331.20 Total per-unit variable costs $ 2,800.00 Total annual fixed costs: Advertising $ 236,500 Rent 178,500 Salaries 386,500 Total annual fixed costs $ 801,500 If 4,250 bed frames were sold, Sleepy Time's operating income (πB) would be: (Do not round intermediate calculations.)
Chloe’s Cafe bakes croissants that it sells to local restaurants and grocery stores. The average costs to bake the croissants are $0.70 for 2,600 and $0.65 for 5,200, If the total cost function for croissants is linear, what will be the average cost to bake 4,400?
Pharoah’s flour supplier has announced a shortage of gluten-free flour. As a result, Pharoah will only be able to purchase 51,800pounds of flour.How many batches of each type of cookie should the company bake? What will the company’s contribution margin be?
Suppose a loyal customer requested to a special order to buy 100 units at $5.50 per unit. This is a one-time only order, the manufacturing company has the capacity to fill this order, and by filling the order no other regular order will go unfilled. Would you fill this order if you were the manager? Why? Is there an opportunity cost associated with this order? Explain. What would be the per-unit profit or loss for filling this order?
Santana Rey has found that Business Solutions’s line of computer desks and chairs has become popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Santana has determined that she only has 1,015 direct labor hours available for the next quarter and wants to optimize her contribution margin given the limited number of direct labor hours available.
Jordahl's grocery store has a small bakery that sells a variety of baked goods. Sales from the bakery average less than 5 percent of the store's total revenue and is considered a cost center. As a means of attracting customers , the bakery manager has decided to sell a cup of coffee and doughnut combo at low price price of $ 2.00. Incremental material costs associated with each combo sale average 0.50 per donut and $ 0.60 per serving of coffee (including a disposable cup). Incremental labor and overhead costs are expected to average $0.80 per combo sale . What is the contribution margin of a combo sale ? How might the manager think the combo will affect the bakery's responsibility margin ?
Premium Beds is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Premium Beds fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales price per unit $ 3,250.00 Per-unit variable costs: Invoice cost 2,500.00 Sales commissions 280.00 Total per-unit variable costs $ 2,780.00 Total annual fixed costs: Advertising $ 230,800 Rent 176,900 Salaries 385,800 Total annual fixed costs $ 793,500 If 3,550 bed frames were sold, Premium Bed's operating income (πB) would be: Multiple Choice $915,000. $955,000. $875,000. $1,015,000. $795,000.