Question

3- Cookies Inc. manufactures and sells tree types of cookies: Chocolate Chip, Vanila Supreme, and Fancy Cookie. The production manager of the company has proposed the introducion of a new line of shortbread cookles. Some information regarding this new product line is shown below Variable costs: $30 per kilogram of cookies. Additional fxed costs: $150,000 Selling price: $60 per kilogram Expected sales: 6,000 kilograms of shortread cookies the company introduced this new line, sales of the cument "Fancy line would drop by 2,000 kilograms. Fancy' provides a contrbution margin of $10 per kilogram a. Should Cookies Inc. introduce the new shortbread cookie line b. the seling price of the new product ine was $55, would your answer in a) change?

Answer 1

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6000 Kgs $ Ca) Sales Units 360,000 Sales Value ( 60x 6,060 ks) Lass (180,000) Nasuiable Cost ($30x 6,000 k) Axed Cost (150, 000) Profit Less Deaease u Centaibution Malgu Fany (lo x 2,e0o k) Net Profit 3,טסeo 01000 eo0 10,600 Ceskius Tnc. liould utrdue new Sheat beead Cookie it will ses ult ine as inarale iu rofis by 10,0e0 (b) Seing Pia is clearty pictue uplead ed by you 55. not The mew visible iu Hue conufdaring it as am Exaihing Paofit Decueate u Preus due todeuase iu Sales PoicuC60-$55]x60,0o kas) $l0,000 30,800) Net Loss 20,000 Theryor it is net pofitable to ceokie ine. meus