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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
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. Sales (6,000 pools) Variable expenses: Variable cost of goods sold Variable selling expenses Total variable expenses Contribution margin Fixed expensest Manufacturing overhead Selling and administrative Total fixed expenses Net operating income (loss) Flexible Budget $ 273,000 Actual $273,000 83,460 102,050 24,000 24,000 107,460 126,858 165,540 146,950 65,000 65,000 90,000 155,000 $ 10,5401 $ (8,050) 90,000 155,000 "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 4.8 pounds Direct materials Direct labor Standard Price on Rate $ 2.60 per pound $8.10 per hour Standard Cost $10.48 Variable manufacturing overhead 0.3 hours $ 3.60 per hour $23.91 0.3 hours 2.43 3.00 Total standard cost per unit "Based on machine-hours During June the plant produced 6,000 pools and incurred the following costs
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