RYT (aka RotYourTeeth) Candy Company sells lollipops. Last year th...

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RYT (aka RotYourTeeth) 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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Part 1: First, we need to break the profits from the lollipops into its component parts. If the revenue is $1,000,000 for 10,000,000 lollipops while the variable costs were $350,000 and the net profits were $100,000, this gives us the following results:

Revenue per lollipop: $0.10
Variable cost per lollipop: $0.035
Contribution margin per lollipop: $0.065...

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