Reference no: EM131975516
Problem - Candy Company sells lollipops.
Last year the company sold 10,000,000 lollipops for $1,000,000.
The Variable Costs were $350,000 and the Net Profits were $100,000.
Administration has directed management to double profits in the next year.
Part 1: Determine the Number of lollipops that must be sold to reach this target.
Part 2: Determine the DL and DM budget needed to reach this target.
DM: Cost $1 per pound
Each unit requires 1/50 of a pound
DL: Labor costs are $10 per hour
Each unit requires .0015 labor hours
Part 3: Determine DL and DM variances & provide explanations to the Board of Directors.
DM: Cost $1.50 per pound - 220,000 pounds used
DL: Cost $12 per hour - 16,000 labor hours used
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