This case tests profitability analysis skills by requiring candidates to calculate per-unit costs across variable and fixed components, identify which product is more profitable, and then diagnose why overall profits are declining despite revenue growth. The declining profitability despite rising volumes points to an unfavorable product mix shift (Cheddar sales growing faster than Gouda despite Gouda having better unit economics), requiring candidates to recognize this and recommend strategies to shift the mix back toward higher-margin products.