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 Budget Actual Sales (6,000 pools) Variable expenses Variable cost of goods sold. Variable selling expenses Total variable expenses Contribution margin Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses Net operating income (loss) $265,000 $265,000 95,580 112,700 14,000 14,000 109,580 126,700 155,420 138,300 63,000 63,000 78,000 78,000 141,000 141,000 $ 14,420 $ (2,700) *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 Direct materials Direct labor 3.9 pounds 0.8 hours Variable manufacturing overhead 0.6 hours $ 2.30 per pound $6.90 per hour $2.40 per hour Cost $8.97 5.52 Total standard cost per unit 1.44 $15.93 "Based on machine-hours. During June, the plant produced 6,000 pools and incurred the following costs: a. Purchased 28,400 pounds of materials at a cost of $2.75 per pound b. Used 23,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be < Prev 6 of 6 Next