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Aunt Connie's Cookies

In: Business and Management

Submitted By keke11
Words 770
Pages 4
Aunt Connie's Cookies
LaKesia Johnson
ACC\561
March 29, 2011
Tony Guice

Aunt Connie's Cookies
Aunt Connie’s Cookies is the brain child of Connie Rocha and her grandniece Maria Villianueva. This family endeavor to off in 1986 when Connie would provide her homemade cookies to a fundraiser. She would provide them 600 cookies for a small fee of $55 (University of Phoenix, 2002) . The products needed to complete this order would come to a grand total of $35. This would include items such as sugar, syrup, and flour. She also could bake 300 cookies at one time in her oven and the cost she would incur would be $10 (University of Phoenix, 2002) . After Connie’s fundraiser success her friends encouraged her to start her own business and Aunt Connie’s Cookies was born.
Connie has entrusted the position of Chief Executive Officer to her grandniece Maria Villianueva. As of September, Maria has brought me on as the Chief Operation Officer. It my duty to help make wise decisions, keep the company in the black and moving forward. As the new COO, my first task was to revise unit price for the lemon crème and real mint cookies. Maria offered the suggestion of paying our distributors more money because she wants Aunt Connie’s Cookies to be a favorite in the convenience food category. Taking Maria suggestion into consideration I, increased the Advertising Expenditure for both products, this would help get our product name out there. I lowered the unit price of Lemon Crème from $2 to $1.93 and Real Mint from $1.80 to $1.72 (University of Phoenix, 2002) . So the Volume on Lemon Crème was 948 packs and on the Real Mint were 976 packs. Lemon Crème posted a revenue of 1830 and Real Mint 1679 (University of Phoenix, 2002) . Now thing seem to be looking up and our variable cost for the Lemon Crème was 1043 and 878 for the Real Mint. Based on the data my decision to reduce the unit price has resulted in good profit.
Next we are approached by a confectioner that wants a bulk order of Real Mint Cookies. Maria would like to take the order but I’m not too sure about it. She felt that the total contribution margin as well as the operating profits for the Lemon Crème are less than the Real Mint Cookies (University of Phoenix, 2002) . So she suggests that we reduce the current production volume for Lemon Crème and produce more Real Mint to make this order. The best decision would be to accept the order by reducing the current production volumes for the Real Mint Cookies. Since I was seeking to maximize operating profits, I decided to produce more of the product that had a greater contribution margin per unit. In this case it was the Lemon Crème Cookies with a contribution margin of 940 and the Real Mint had 788 (University of Phoenix, 2002) . With a peanut butter cookie manufacturer wants to sell off the unit. Maria felt if we bought the unit and produced the peanut butter cookies we would lose big. She wanted to produce more Lemon Crème Cookies because it’s our biggest seller. So I decided to up production on those cookies. The breakeven point for manufacturing Lemon Crème Cookies in the newly acquired unit is 563,000 packs (University of Phoenix, 2002) . I chose to manufacture 600,000 packs resulting in operating profits from the new unit. I was able to meet the exact monthly production target on the Lemon Crème Cookies. This also increased the company’s overall profit.
With the end of the year nearing, Maria would like to concentrate on the Xmas and New Years to boost sales and increase profit. My forecast for the Chocorones was 1,900,000 packs so the equipment-intensive operations would be better. The reason being is, the indifferent point for both the labor-intensive operations and the equipment-intensive operations is both equal to 1,000,000 (University of Phoenix, 2002) . The will be sold for $2.25 a pack and will be a great seasonal item.
Aunt Connie’s Cookies is a great company with growth potential if the right choices are made. One bad move and it can be company killer. Mangers will need to work together for the company to continue to grow and be profitable. Also research needs to be done to expand the current cookie line.

Reference
University of Phoenix. (2002). Contribution Margin and Breakeven Analysis. Retrieved from https://ecampus.phoenix.edu/secure/aapd/vendors/tata/sims/accounting/contribution/accounting_contribution_frame.html

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