Sarah Cameron has loved confections her whole life and as a young girl learned how to make peanut brittle, fudge, and toffee from her grandmother. Sarah has continued the candy-making tradition in her family throughout her life and made fudge at Christmas and other holidays for friends and family and also sold fudge at craft shows and bazaars. Several years ago, Sarah explored the idea of making and sell- ing her own brand of confections on a commercial basis. When the opportunity arose and her business plan allowed, Sarah opened a candy store, Fudge Delights Inc., in which she sells a variety of candies and confections, many of which remind customers of candy they had as kids. In addition to the candy that she buys from suppliers, Sarah makes different flavours of fudge for sale in her store. Because fudge has a rea- sonable shelf life, Sarah can make it in large batches weeks ahead of the time anticipated for sale. Sarah's favourite flavours include classic maple, chocolate chip chocolate, maple walnut, cherries and cream, chocolate mint julep, lemon drop, and toffee almond. From Sarah's perspective, the variety and number of flavours is as large as one's imagination. Sarah's confectionary store has earned a great reputation for premium confections and high-quality fudge, resulting in a 50% increase in sales year over year for the last four years. There are many ways to make fudge. Sarah uses the same basic technique for all the varieties. To make the fudge, she cooks a sugar syrup to the soft-ball stage, lets it cool for a specified amount of time, and then agitates it until crystals form that are smaller than the original sugar crystals; the agitation is primarily what gives fudge its creamy texture. Sarah does not vary the approach to making fudge but does vary the ingredi- ents to create the different flavours. Currently Sarah does not make custom flavours for customers but might consider doing so in the future if time and demand allow. The fudge is sold in %-lb. and 1-lb. slabs at a price of $7.00 per lb. or $12.00 for 1 lb. regardless of the flavour of fudge. (Homemade fudge is typically sold by the pound in Canada.) In Sarah's previous job with a large international soap maker, she learned the need for refined cost infor- mation to make good decisions about pricing and profitability analyses of various product lines. Several years ago when Sarah set up her business, she adopted a job-order system for costing the various kinds of fudge. Sarah has been quite diligent about keeping very detailed records for each batch of fudge. Sarah processes all the fudge on-site in small batches by flavour. For each batch, Sarah collects information on the amount of butter, sugar, milk, and other ingredients like chocolate, walnuts, vanilla extract, hazelnuts, and peanut butter. The basic fudge recipe and process is exactly the same for the various flavours of fudge except at the end, when different ingredients are added. The information on each batch is eventually recorded and stored on an electronic index card. The information allows Sarah to best understand the difference in the cost of each batch of fudge. Although the cost information does not affect the selling price of the fudge (because the store policy is to price all fudge at the same price), it does allow Sarah to know which flavours are more costly. Ultimately, this information could result in a flavour being dropped from her product line or sold at a premium price. With the growth in the business, Sarah has hired an additional fudge maker, Zhanna, and is training her in the art of making fudge that meets Sarah's standards. Zhanna, like Sarah, has made fudge for most of her life. However, unlike Sarah, Zhanna has no affinity for the costing system that Sarah has put in place. Zhanna is questioning whether it makes sense to record the details that Sarah requires. The manual entry of each ingredient added to the batch of fudge takes as much time as making the batch itself. Zhanna is questioning whether the information really is that useful given that the prices are the same and they mostly make batches of their most popular flavours. Sarah has decided to take a second glance at the information she has been collecting during the fudge-making process to ensure the cost data collected provide useful information about overall cost. The ingredients for making one batch (10 lb.) of fudge for four of the most popular flavours of fudge are shown in Exhibit 1. Sarah has set up a record-keeping system such that the amount used in each batch is recorded by hand as the ingredient is added. The recording is usually done by entering the ingredient amounts on a card and then using the card to enter the data into an electronic index card and ultimately an electronic spreadsheet. At the end of the month, Sarah reviews the data entry by batch and calculates the total cost of the batch. At the end of the year, Sarah reviews the batch data but does no analysis with the data; however, the possibility of analysis exists because the data are available. The costs of the ingredients, on average, are in Exhibit 2. Sarah would like to demonstrate that the cost data collected provide valuable insight into the costs of the various flavours of fudge and would like to be able to justify her use of job-order costing. Sarah knows that the alternative is to adopt a process costing system but is hesitant about changing costing approaches. She wants to have good cost data for decision-making and is hesitant to switch to process costing because she fears a loss of refined data from her costing system and the implications on cost of any changes in ingredients (such as the fluctuation in the price of white sugar last year). What is the cost per pound of each of the four most popular fudge flavours produced by Fudge Delights? Show your calculations to justify your answer. The calculation can be submitted separately in an excel document. Please make a note in your report if this is what you choose to do. What is the profitability of each of the four most popular fudge flavours produced by Fudge Delights? Show your calculations to justify your answer. The calculation can be submitted separately in an excel document. Please make a note in your report if this is what you choose to do. Are the differences in the costs and profitability of each of the four flavours of fudge significant? Why or why not? Show your calculations to justify your answer. The calculation can be submitted separately in an excel document. Please make a note in your report if this is what you choose to do