CHECK FIGURES (1a) Materials price variance: $3,000 F (2) Net variance: $16,290 U Miller Toy Company manufactures a plastic swimming pool at its Westwood Tant. The standard cost for one pool is as follows: Tant Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 1.5 kilograms $4 per kilogram $ 6.00 Direct labour 0.8 hours $6 per hour 4.80 Variable manufacturing overhead 0.4 machine-hours $3 per machine-hour 1.20 Total standard cost $12.00 The plant has been experiencing problems for some time, as is shown by its June income statement when it made and sold 15,000 pools; the normal volume is 15,150 pools per month. Fixed costs are allocated using machine-hours. Sales (15,000 pools) Less: Variable expenses: Variable cost of goods sold Variable selling expenses Total variable expenses Contribution margin Flexible Budgeted Actual $450,000 $450,000 180,000 196,290 20,000 20,000 200,000 216,290 250.000 the normal volume is 15,150 pools per month. Fixed costs are allocated using machine-hours. Sales (15,000 pools) Less: Variable expenses: Variable cost of goods sold Variable selling expenses Total variable expenses Flexible Budgeted Actual $450,000 $450,000 180,000 196,290 20,000 20,000 200,000 216,290 250,000 233,710 Contribution margin Less: Fixed expenses Manufacturing overhead Selling and administrative Total fixed expenses Net income Contains direct materials, direct labour, and variable manufacturing overhead 130,290 130,290 84,000 84,000 214,290 214,290 $ 35,710 $ 19,420 Janet Dunn, the general manager of the Westwood Plant. wants to get things under control. She needs information about the operations in June since the income statement signalled that the problem could be due to the variable cost of goods sold. Dunn learns the following about operations and costs in June a 30.000 kilograms of materials were purchased at a cost of $3.90 per kilogram. b. 24.600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be jgnored) c. 11.800 direct labour-hours were worked at a cost of $7 per hour. d. Variable manufacturing overhead cost totalling $18.290 for the month was incurred. A total of 5.900 machine-hours was recorded. act of ac