In a competitive marketing environment for consumer products, manufacturers are not allowed the luxury of raising selling prices to increase profits. This environment makes it difficult to increase sales unit volume without increasing very costly marketing expenses. Without price increases and sales volume increases, it is the job of top management decision makers (you) to find other ways to increase profitability. Background: We manufacture and distribute W & Ws, candy coated chocolate spheroids, in assorted colors. The production schedule is 1200 cases per 8 hours. Breaking down our standard cost of sales for our product, W & Ws, packaged in 3.75 ounce bags, 24 bags to a box, we find: Labor: 88 hourly workers, $14.77 per hour, 8 hours per day, 5 days per week, 50 weeks per year, no overtime 24 salaried managers making $39,600/ year each Ingredients: Chocolate; 2.0 ounces per bag, $9.99 per pound Hard candy coating: 1.75 ounces per bag, $6.55 per pound Caffeine: 1 gram per bag, $300 per kilogram Packaging: One 3.75 oz. bag, $0.005, and one shipping case (each case contains 24 bags), for $0.120 each. Overhead: $5600 per 8 hour shift Variances: Yesterday's production variance report shows we overused hourly labor by 3.8%, candy bags by 4.9%, chocolate by 4.9%, and candy coating by 4.9%. Caffeine's reported usage was unfavorable by 11%. Actual production was 1200 cases of W & Ws. Margin: We currently price to yield a 25% gross margin (selling price-standard cost/selling price). Based on the above, answer the following questions: 

1. Calculate the standard cost for one 3.75 ounce bage of W & Ws (100% yield, no waste). 

2. Calculate the standard cost for 1200 cases (one day's production). 

3. Calculate the gross sales dollar value for one day's production and the gross margin dollars from those sales. 

4. What is the total dollar amount for all variances listed above for yesterday? 

5. If we can reduce the material variances by 20% assuming these variances occur every day of operation, how much waste will we save in one year? 

6. How many dollars of sales are needed to yield the same gross margin dollar amount as the 20% variance reductions? 

7. Prepare a step by step action plan to reduce waste and expenses. What did you question while analyzing the cost structure? What do you think is happening on the factory floor?