Eastwood Cake Factory sells chocolate cakes, birthday cakes, and specialty cakes. The factory is experiencing a bottleneck and is trying to determine which cake is most profitable. Even though Eastwood may have to limit its orders, it is concerned about customer service and satisfaction.Line Item DescriptionChocolate CakeBirthday CakeSpecialty CakeSales price $20.00 $45.00 $60.00Variable cost per cake $5.00 $12.00 $20.00Hours needed to bake, frost, and decorate1 hour2.5 hours2 hoursa. Compute the contribution margin per hour per cake. If required, round your answers to two decimal places.CakeAmountChocolate cake$fill in the blank 1Birthday cake$fill in the blank 2Specialty cake$fill in the blank 3b. Determine which cakes the company should try to sell more of first, second, and then last.RankCake1st: 2nd: 3rd:

The amount that each unit of sales contributes to profit-making and covering fixed costs is known as the contribution margin. It is computed by deducting sales income from variable costs. Pricing, production, and marketing decisions are made using it. The break-even point, or the point at which sales income equals total costs, can also be determined using this method.Excel Calculation:Therefore-Part (A): CakeAmount Chocolate cake$15.00 Birthday cake$13.20 Specialty cake$20.00Part (B): RankCake 1stSpecialty 2ndChocolate 3rdBirthday

Answered: Eastwood Cake Factory sells chocolate…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Eastwood Cake Factory sells chocolate cakes, birthday cakes, and specialty cakes. The factory is experiencing a bottleneck and is trying to determine which cake is most profitable. Even though Eastwood may have to limit its orders, it is concerned about customer service and satisfaction.