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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
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: Budgeted Actual Sales (7,000 pools) 265,000 $265,000 Variable expenses Variable cost of goods sold 79.240 97.525 Variable selling expenses 19,000 19.000 Total variable expenses 98.240 116.525 Contribution margin 166.760 148,475 Fixed expenses Manufacturing overhead 67,000 67,000 Selling and administrative 85.000 85.000 Total fixed expenses 152.000 152.000 Net operating income (loss) 14,760 (3,525) *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 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
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