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 (4,000 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) Flexible Budget $250,000 66,760 Actual $ 250,000 81,190 22,000 22,000 88,760 103,190 161,240 146,810 63,000 63,000 88,000 88,000 151,000 151,000 $ 10,240 $ (4,190) "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 3.8 pounds Standard Cost Standard Price or Rate Direct materials $2.40 per pound $ 9.12 Direct labor 0.7 hours $7.90 per hour 5.53 Variable manufacturing overhead 0.6 hours $3.40 per hour 2.04 Total standard cost per unit $16.69 "Based on machine-hours. During June the plant produced 4,000 pools and incurred the following costs: a. Purchased 20,200 pounds of materials at a cost of $2.85 per pound. b. Used 15,000 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 3,400 direct labor-hours at a cost of $7.60 per hour. d. Incurred variable manufacturing overhead cost totaling $10,260 for the month. A total of 2,700 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis.