Lolly Pops Inc. makes really big lollypops in two sizes, large & giant. The company sells lollipops to convenience stores, fairs, schools for fund raising and in bulk on the internet. Summer is approaching & the company is preparing its budget for the month of December. The lollypops are handmade, mostly out of sugar and attached to wooden sticks. Expected sales are based on past experience. Other information for the month of December follows: Input prices: Direct materials $0.50 per kg Sugar Sticks $0.30 each Direct manufacturing labour $8 per direct manufacturing labour hour Input quantities per unit of output: Large Giant Direct material Sugar 0.25 kg 0.5 kg Sticks 1 1 Direct manufacturing labour hours (DMLH) 0.2 hours 0.25 hours Set up hours per batch 0.08 hours 0.09 hours Inventory Information, direct materials: Sugar Sticks Beginning inventory 125 kgs 350 Target ending inventory 240 kg 480 Cost of beginning inventory $64 $105 Note: Lolly Pops Inc. accounts for direct materials using FIFO cost flow assumption. Sales and inventory information, finished goods: Large Giant Expected sales in units 3000 1800 Selling price $3 $4 Target ending inventory in units 300 180 Beginning inventory in units 200 150 Beginning inventory in dollars $500 $474