Comprehensive Variance Analysis Miler Toy Company manufactures a plastic swimming pool at its Westwocd Plant. The plant has been experiencing problems as shown by its June contribution format income statement below Budgeted Actual Sales (15,000 pools) Variable expenses: $450,000 $450,000 Varlable cost of goods sold.. Variable selling expenses Total variable expenses Contribution margin Flxed expenses: 180,000 196,290 20,000 20,000 200,000 216,290 250,000 233,710 Manufacturing overhead Selling and administratve Total fixed expenses Net operating income Contains direct materlals, direct labor, and varlablo manutacturing overhead. 130,000 30,000 84,000 84,000 214,000 214,000 $36,000 $ 19,710 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 lles in the variable cost ot goods sold. She has been provided with the following standard cost per swimming pool Standard Quantity Standard Price Standard or Hours or Rate Cost Direct materials. Direct labor Variable manufacturing overhead Total standard cost 3.0 pounds $2.00 per pound 6.00 0.8 hoursS 0.4 hours $6.00 per hour $3.00 per hour 4.80 1.20 $12.00 Based on machine-hours. During June the plant produced 15,000 pocls and incurred the following costs. a. Purchased 60,000 pounds of materials at a cost of $1.95 per pound. b. Used 49,200 pounds of materials in production. (Finished goods and work in process inventones are insigniticant and can be ignored.) C. Worked 11,800 direct labor-hours at a cost of $7.00 per hour. d. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machine hours was recorded It is the company's policy to close all variances to cost of goods sold on a monthly basi5 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 efmiciency variances. 2. Summanze the variances that you computed In (1) above by showing the ne: overall favorable or unfavorable variance for the month. What impact did this figure have on the company's income statement? Show computations. 3. Pick out the two most significant variances that you computed in (1) above. Explain to Ms. Dunn possible causes of these vanances