Final Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems for some time as shown by its June profit statement below: Budgeted Actual Sales (15,000 pools) $ 450,000 $ 456,000 Less Variable Expenses Variable Cost of Goods Sold * 195,000 202,700 Variable Selling Expenses 20,000 23,000 Total Variable Expenses 215,000 225,700 Contribution Margin $ 235,000 $ 230,300 Less Fixed Expenses Manufacturing Overhead 130,000 130,000 Selling and Administrative 84,000 84,000 Total Fixed Expenses 214,000 214,000 Net Profit $ 21,000 $ 16,300 * Contains direct materials, direct labor, and variable manufacturing overhead Janet Dunn, who has just been appointed general manager of Westwood Plant, has been given instructions to get things under control. Upon reviewing the plants profit 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: Direct Materials 3.00 kilos per unit at $2.00 per kilo Direct Labor 0.90 hours per unit at $6.00 per hour Variable Manufacturing Overhead 0.44 hours* per unit at $5.00 per hour * Based on Machine-hours Ms. Dunn has determined that during June the plant produced 15,000 pools and incurred the following costs: Purchased 50,000 kilos of materials at a cost of $2.15 per kilo. There were 21,800 kilos of materials on hand at the end of May. 27,600 kilos of materials remained in the warehouse at the end of June. Worked 13,800 direct labor hours at a cost of $5.85 per hour. Incurred variable manufacturing overhead cost totaling $35,070 for the month. A total of 6,700 machine hours was recorded. Required: 1. Compute and analyze the following variances for June: a. Direct materials price and quantity variances. b. Direct labor rate and efficiency variances. c. Variable overhead spending and efficiency variances. What relationship can you see between this efficiency variance and the labor efficiency variance? 2. What other variances can you see, if there are any?