Question

PS.52 The Station, a boutique cookie company, needs to create a production process for its new cinnamon malt ball cookies. To help accomplish this, the company has put together some numbers for production costs (per dozen cookies for the variable costs).

Process Type	Fixed Costs	Labor Costs	Material Costs
Pre-Bake	$215	$1.86	$0.73
Easy Bake	$580	$1.45	$0.51
Speed Bake	$865	$1.30	$0.51

The Station estimates demand for the semester will be 975 dozen cinnamon malt ball cookies. Due to the cookies' expected popularity the selling price will be $5.75 per dozen.

Based on the projected demand (volume) for the semester, which process type should they select?

		Speed Bake
		Easy Bake
		Pre-Bake

Under this process type—the one selected in the previous question—what would be their profits for the semester? (Display your answer to the nearest whole number).
   

Answer 1

Based on the projected demand (volume) for the semester, which process type should they select?

Process Type	Fixed Costs	Labor Costs	Material Costs	Demand	Variable cost [Demand * (labor cost + material cost)]	Total Cost (fixed+ variable)	Revenue (price * demand)	Profit (revenue - total cost)
Pre-Bake	$215	$1.86	$0.73	975	$2,525.25	$2,740	5606.25	$2866
Easy Bake	$580	$1.45	$0.51	975	$1,911.00	$2,491	5606.25	$3115
Speed Bake	$865	$1.30	$0.51	975	$1,764.75	$2,630	5606.25	$2976

Based on total cost and profit analysis, easy bake should be selected because it yields highest profit.

Under this process type—the one selected in the previous question—what would be their profits for the semester? (Display your answer to the nearest whole number).

The profits in this semester would be $3115 (calculated in the above table)