During June the plant produced 15,000 pools and incurred the following COSIS: a. Purchased 60.000 pounds of materials at a cost of $4.95 per pound, b. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked H.800 direct labor-hours at a cost of $l7.00 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 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 efciency variances. 2. Summarize the variances that you computed in (1) above by showing the net 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 signicant variances that you computed in (1) above. Explain to Ms. Dunn possible causes of these variances. Show transcribed image text 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 Sales (15.000 pools) $675000 Variable expenses: Variable cost of goods sold' 435.000 Variable selling expenses 20.000 Total variable expenses 455,000 Contribution margin 220,000 Fixed expenses: Manufacturing overhead 130.000 Selling and administrative 84,000 Total xed expenses 214.000 Net operating income (loss) 5 6.000 'Contains direct materials, direct labor. and variable manufacturing overhead. Actual $675,000 461.890 20,000 481.890 193.110 130.000 84.000 214,000 $ (20,390) 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 Hours Direct materials 3.0 pounds Direct labor 0.8 hours Variable manufacturing overhead 0.4 hours. Total standard cost per unit 'Based on machine-hours. During June the plant produced 15,000 pools and incurred the following costs: Standard Price or Rate $5.00 per pound $16.00 per hour $3.00 per hour Standard Cost 3 15.00 12.80 529.00 Page 479