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 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) $ 210,000 Actual $ 210,000 50,680 63,710 12,000 12,000 62,680 75,710 147,320 134,290 61,000 61,000 76,000 76,000 137,000 137,000 $ 10,320 $ (2,710) *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 Standard Price or Standard Direct materials Direct labor Hours 3.7 pounds 0.6 hours Rate $ 2.10 per pound Cost $ 7.77 $ 6.70 per hour Variable manufacturing overhead Total standard cost per unit 0.4 hours* $ 2.20 per hour 4.02 0.88 $ 12.67