=+2-27 KK Variable costs, fixed costs, relevant range OBJECTIVE 3 Sweet Candy manufactures rock lollies in a fully automated process. The machine that produces lollies was purchased recently and can make 4100 per month. The machine costs $9000 and is depreciated using straight-line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse, and other fixed manufacturing overhead costs, total $1200 per month.

Sweet Candy currently makes and sells 3800 rock lollies per month. Sweet Candy buys just enough materials each month to make the rock lollies it needs to sell. Materials cost $0.30 per rock lolly.

Next year Sweet Candy expects demand to increase by 100%. At this volume of materials purchased, it will get a 10% discount on price. Rent and other fixed manufacturing overhead costs will remain the same.

Required