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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 the DL and DM variances and provide explanations to the Board of Directors.

           

            DM:     Cost $1.50 per pound ,  220,000 pounds used

            DL:      Cost $12 per hour, 16000 labor hours used    

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