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 BudgetActualSales (8,000 pools)$ 240,000$ 240,000Variable expenses: Variable cost of goods sold*94,000112,470Variable selling expenses10,00010,000Total variable expenses104,000122,470Contribution margin136,000117,530Fixed expenses: Manufacturing overhead55,00055,000Selling and administrative70,00070,000Total fixed expenses125,000125,000Net operating income (loss)$ 11,000$ (7,470)

*Contains direct materials, direct labor, 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 plants 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 HoursStandard Price or RateStandard CostDirect materials3.5pounds$ 2.50per pound$ 8.75Direct labor0.4hours$ 6.50per hour2.60Variable manufacturing overhead0.2hours*$ 2.00per hour0.40Total standard cost per unit $ 11.75

*Based on machine-hours.

During June, the plant produced 8,000 pools and incurred the following costs:

1. Purchased 33,000 pounds of materials at a cost of $2.95 per pound.

Used 27,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

Worked 3,800 direct labor-hours at a cost of $6.20 per hour.

Incurred variable manufacturing overhead cost totaling $4,560 for the month. A total of 1,900 machine-hours was recorded.

It is the companys 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 requirement 1 by showing the net overall favorable or unfavorable variance for the month.