Special-Order Pricing on Idle Capacity
A short commercial bakery decision problem. Use the supplied facts, commit to one action, then check your reasoning. Fictional practice; no leaderboard score is recorded.
Commercial bakery · contribution margin on idle capacity
Your ovens sit idle overnight. A grocery chain offers a standing order at $2.10 per loaf. Your fully loaded cost is $2.40, of which $1.55 is ingredients and direct labor and $0.85 is allocated overhead. Your daytime retail business is unaffected and stays full.
| Given fact | Scenario data |
|---|---|
| Overnight capacity | Idle |
| Offered price / loaf | $2.10 |
| Ingredients and direct labor / loaf | $1.55 |
| Allocated overhead / loaf | $0.85 |
| Fully loaded cost / loaf | $2.40 |
| Daytime retail trade | Full and unaffected |