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Jane owns a confectionary company which has been selling Lollipops since it started operations 10 year ago. However recently, the company has added a second
Jane owns a confectionary company which has been selling Lollipops since it started operations 10 year ago. However recently, the company has added a second product, Jellybabies. Jane has a modern production facility which relies more on machines and less on workers to produce her products. Jane's Confectionary (JC) has a capacity of 900 machine hours per month. These machines can produce both products. JC uses machine hours as the allocation base for manufacturing overhead. Direct labour is a variable cost where workers are paid $15 per hour. JC has demand for a total of 6,000 batches of lollipops and 8,000 batches ofjellybabies per month. This level of demand (along with selling price and costs) is not expected to change anytime soon. Demand for JC's products is made up of many customers that purchase both products from the company. JC's selling price and associated costs per batch of lollipops and jellybabies are as follows: Lollipops Jellybabies Selling price per batch $54.00 $28.50 Costs per batch: Direct materials $5.25 $2.50 Direct Labour ($15/hour) $13.00 $1.50 Fixed manufacturing overhead $2.50 $ 5.00 cost Variable selling and admin cost $15.00 $3.00 Total Costs per batch $35.75 $12.00 Profit per batch $18.25 $16.50 Number of machine hours 0.05 hours required to produce each batch 0.1 hoursPrepare an analysis that shows the most profitable mix in which to manufacture lollipops and jellybabies in the upcoming month. How many orders of each confectionery item will be fulfilled? Consider only quantitative factors. Show all calculations.Similar to the previous question, JC has decided to prioritise Lollilops over Jellybabies (based on a combination of qualitative and quantitative factors). JC has turned down the opportunity to rent the machine described in the previous question. JC now has another opportunity to lease another machine for the upcoming month (i.e., for 1 month only). This machine is a specialised machine that produces Lollipops only. It can produce up to 5,000 batches of Lollipops during the month. The owner of this machine wants JC to pay $45,000 to lease this machine. Should JC lease this machine for $45,000? Assume there are no other costs involved in operating the machine other than the cost to lease this machine. Explain. Consider quantitative factors only. Show all calculations
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