9-18 (Algo) Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6] Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below: Sales (4,000 pools) Flexible Budget $275,000 Actual $275,000 Variable expenses: Variable cost of goods sold 74,720 90,040 Variable selling expenses 27,000 27,000 Total variable expenses 101,720 117,040 Contribution margin 173,280 157,960 Fixed expenses: Manufacturing overhead Selling and administrative 68,000 68,000 93,000 93,000 Total fixed expenses Net operating income (loss) 161,000 161,000 $ 12,280 $ (3,040) "Contains direct materials, direct labor, and variable manufacturing overhead. Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to "get things under control." Upon reviewing the plant's income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool: Standard Quantity or Bours 4.3 pounds 0.6 hours Standard Standard Price or Rate Direct materials $ 2.90 per pound Cost $ 12.47 Variable manufacturing overhead Direct labor Total standard cost per unit "Based on machine-hours. During lune the plant produced 4000 nonls and incurred the following costs $ 8.40 per hour 0.3 hours* $ 3.90 per hour 5.04 1.17 $18.68 a. Purchased 22,200 pounds of materials at a cost of $3.35 per pound. b. Used 17,000 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 3,000 direct labor-hours at a cost of $8.10 per hour. d. Incurred variable manufacturing overhead cost totaling $6,450 for the month. A total of 1,500 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: 1. Compute the following variances for June: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. Complete this question by entering your answers in the tabs below. Required 1 Required 2 1a. Compute the following variances for June, materials price and quantity variances. 1b. Compute the following variances for June, labor rate and efficiency variances. 1c. Compute the following variances for June, variable overhead rate and efficiency variances. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) 1a. Material price variance 1a. Material quantity variance 1b. Labor rate variance Show less A *#### # # enry For thry Required 1 Required 2 1a. Compute the following variances for June, materials price and quantity variances. 1b. Compute the following variances for June, labor rate and efficiency variances. 1c. Compute the following variances for June, variable overhead rate and efficiency variances. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) 1a. Material price variance 1a. Material quantity variance 1b. Labor rate variance 1b. Labor efficiency variance 1c. Variable overhead rate variance 1c. Variable overhead efficiency variance Show less A