. The activity that contributes most to Tooth Fairy’s manufacturing overhead cost is the cost of themixing activity. Lorrie wants to gain a better understanding of what drives the cost of this activity.In doing so, Lorrie hopes to be in a better position to forecast her costs as she finalises her businessplans for next year.(a) Lorrie believes that the most likely cost driver of the mixing activity is the weight of the candymixture (measured in kilograms). She presents you with data on mixing cost and the weightof candy mixture from the past 14 weeks (see Table 1), and informs you that the relevantrange of mixture weight is always between 90 kilograms and 250 kilograms.(i) Use the High-Low method to develop a cost equation for mixing cost, using mixtureweight as the cost driver.(ii) The operations manager thinks that number of batches is a better cost driver (therelevant range of batches is 300-1,500). Use the High-Low method to develop a costequation for mixing cost using number of batches as the cost driver.

1. Lorrie Toothe, the CEO of Tooth Fairy, asks you to evaluate their lollipop manufacturing process.(a) Identify two non-value-added activities. Justify your answer.(b) For the activity “cutting candy into the desired shape”, identify one efficiency measure andone effectiveness measure. Explain why you choose these measures.2. After reviewing your answers to Question 1, Lorrie wants to learn more about the causes of thehigh costs of the process and a problem that customers are complaining about (see below).(a) For one of the non-value added activities you identified in Part 1(a), identify one possible rootcause for this activity.(b) Tooth Fairy’s customers have been complaining about a lack of consistency in flavour andappearance of their lollipops. Apply the Fishbone diagram framework to identify one potentialcause under each of the “ribs” of the Fishbone diagram (that is, identify one cause each underthe category of machine, material, method and labour).3. Impressed with your responses thus far, Lorrie asks you to identify how to improve her operations.(a) Based on your earlier answers, provide two recommendations to Lorrie to improve ToothFairy’s lollipop manufacturing process.(b) For each recommendation, identify the target activity for improvement and explain which ofthe four approach(es) you are using to reduce activity cost (i.e., activity elimination, activityreduction, activity selection and activity sharing).(c) Classify your recommendation as either business process reengineering (BPR) or continuousimprovement (CI). Justify your answer.

2. After reviewing your answers to Question 1, Lorrie wants to learn more about the causes of thehigh costs of the process and a problem that customers are complaining about (see below).(a) For one of the non-value added activities you identified in Part 1(a), identify one possible rootcause for this activity.(b) Tooth Fairy’s customers have been complaining about a lack of consistency in flavour andappearance of their lollipops. Apply the Fishbone diagram framework to identify one potentialcause under each of the “ribs” of the Fishbone diagram (that is, identify one cause each underthe category of machine, material, method and labour).

Easy-toothy is a price-taking producer of tooth fairy’s sling bags (these are bags for tooth fairies to carry coins and teeth). The following table depicts Easy-toothy’s total cost of producing different quantities of tooth fairy’s sling bags.Output levelTotal Cost ($)0012263x427542Which of the following values of x is consistent with Easy-toothy to optimally produce 3 units of output when the price of tooth fairy’s sling bags is $9/unit?142024There is insufficient information to determine.

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolateGroup of answer choicesincreases, and producer surplus increases.decreases, and producer surplus decreases.decreases, and producer surplus increases.increases, and producer surplus decreases

At the profit-maximizing quantity, what is the total cost of producing ear buds?