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Estimating the contribution margin for each price of the cookies produced, and the marketing expense, could help Maria make an educated decision for profit optimization.
In considering whether or not to accept the large bulk order for one million Real Mint cookies at $1.2 per pack needed in one month, which on the average sold for $1.72 per pack, Maria should have considered the contribution margin. Maria had to consider the difference between the selling price of the cookie and the cost to produce the order as well as the sales revenue. Before accepting the large bulk order, Maria had to compare the total contribution margin and operating profit for the production of both the Lemon Creme cookie and the Real Mint cookie...
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