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 (4,000 pools) 210,000 $210,000 Variable expenses: Variable cost of goods sold* 50,680 63,710 12,000 12,000 Variable selling expenses Total variable expenses 62,680 75,710 Contribution margin 147,320 134.290 Fixed expenses 61,000 61,000 Manufacturing overhead Selling and administrative 76,000 76,000 Total fixed expenses 137,000 137,000 10,320 (2,710) Net operating income (loss) *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: Standard Quantity Standard Price or Hours Cost 3.7 pounds $2.10 per pound 7.77 Direct materials $6.70 per hour Direct labor 0.6 hours 4.02 $2.20 per hour Variable manufacturing overhead 0.88 0.4 hours 12.67 Total standard cost *Based on machine-hours