9hw-3

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 Flexible Budget Actual $ 210,000 $ 210,000 Sales (3,000 pools) Variable expenses Variable cost of goods sold" Variable selling expenses Total variable expenses Contribution margin Fixed expenses Manufacturing overhead Selling and administrative Total Fixed expenses Net operating income (los) 38,220 15,000 53,220 156,780 49,235 15,000 64,235 145, 765 66,000 66,000 81,000 81,000 147.000 147,000 9,780 $ (1,235) $ *Contains direct materials, direct lobor, 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 hos 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 Standard Price Standard Hours or Rate Cost Direct materials 3.1 pounds $ 2.60 per pound 5 8.06 Direct labor 0.5 hours $ 7.20 per hour 3.60 Variable wanufacturing overbead 0.4 hours. 5 2.70 per hour 1.08 Total standard cost per unit 5 12.74 *Based on machine-hours During June the plant produced 3.000 pools and incurred the following costs ra Purchased 14,300 pounds of materials at a cost of $305 per pound b Used 9,100 pounds of materials in production (Finished goods and work in process inventories are insignificant and can be ignored ignored.) c Worked 2.100 direct labor-hours at a cost of $6.90 per hour d. Incurred variable manufacturing overhead cost totaling $4,650 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 vanances for June, vanable overhead rate and efficiency variances (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "T" for favorable, "U" for unfavorable, and "None" for no effect (ie, zero variance). Input all amounts as positive values.) Show less 1a Material price variance Material quantity variance 1b Labor rate variance Labor efficiency variance I Menu and rate vann During June the plant produced 3,000 pools and incurred the following costs a. Purchased 14,300 pounds of materials at a cost of $3.05 per pound b Used 9100 pounds of materials in production (Finished goods and work in process inventories are insignificant and can be ignored) c Worked 2,100 direct labor hours at a cost of $6.90 per hour d. Incurred variable manufacturing overhead cost totaling $4,650 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 Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input the amount as positive value.) Net variance Paulo