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 (5,500 pools) $275,000 $275,000 Variable expenses: Variable cost of goods sold* 94,160 103,536 Variable selling expenses 19,000 19,000 Total variable expenses 113,160 122,536 Contribution margin 161,840 152,464 Fixed expenses: Manufacturing overhead 52,500 52,500 Selling and administrative 68,500 68,500 Total fixed expenses 121,000 121,000 Net operating income $40,840 $31,464 *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 or Hours Standard Price or Rate Standard Cost Direct materials 4.80 pounds $2.60 per pound $12.48 Direct labor .50 hours $8.20 per hour 4.10 Variable manufacturing overhead .30 hours* $1.80 per hour .54 Total standard cost $17.12 *Based on machine-hours. During June the plant produced 5,500 pools and incurred the following costs: a. Purchased 32,680 pounds of materials at a cost of $2.80 per pound. b. Used 26,100 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 3,150 direct labor-hours at a cost of $7.90 per hour. d. Incurred variable manufacturing overhead cost totaling $4,255 for the month. A total of 1,850 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis