• Research Paper on:
    Cookies Case Study

    Number of Pages: 4

     

    Summary of the research paper:

    This 4 page paper examines a case study supplied by the student looking at contribution and break even analysis. Using a supplied example three questions are answered concerns how using contribution analysis and break even analysis could help a company decide which orders to accept, if production should be increased where there is an increase in overhead costs and how to determine if a project will be profitable. The bibliography cites 1 source.

    Name of Research Paper File: TS14_TEcookies.rtf

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    Unformatted Sample Text from the Research Paper:
    to be the most profitable for the company. For any product there will be fixed costs, such as the cost of running the factory, and the cost of the goods,  the materials etc. When using contribution the direct cost of the goods can be calculated and anything above this cost that is received from the price charged will be a  contribution towards the fixed coasts. After these fixed costs are paid the contribution will be the element of the price that will make the profits. The decisions made need to  maximise the contribution that is being received. If there needs to be the reduction of one type of cookie manufacture in order to facilitate the production of the lemon cr?me  the cookie chosen will have to be one that has a lower contribution margin, assuming there are no change over costs. If there are change over costs these should also  be factored in. There are some circumstances under which the order should not be accepted. If the contribution rate will be lower than any other production the this may  become an ineffective use of resources. However, it is also possible that the bulk order may be more than the usual capacity. If this is the case it may add  to the overheads, in effect increasing the level of the break even point, then the increased contribution may not be sufficient and the break even point will be later and  profit may be lower. Finally, if the cookies are all needed and support each others sales, and the reduction in the production of one may impact on sales of  ther, due to being complimentary products, then this may also be a circumstance under which the bulk order should be rejected (Nellis and Parker, 2000). Part 2 Looking 

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