Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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. ces Flexible Budget Actual Sales (15,000 pools) $675,000 $675,000 Variable expenses: Variable cost of goods solds 435,000 461,890 Variable selling expenses 20,000 20,000 Total variable expenses 455,000 481,898 Contribution margin 220,000 193, 110 Fixed expenses: Manufacturing overhead 130,000 130,000 Selling and administrative B4,000 84,000 Total fixed expenses 214,000 214,000 Net operating incone (loss) $6,000 (20,890) 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 Standard Hours or Rate Cost Direct materials 3.0 pounds $ 5.00 per pound $15.00 Direct labor 0.8 hours $16.00 per hour 12.80 Variable manufacturing overhead 0.4 hours $ 3.00 per hour 1.20 Total standard cost per unit $29.00 "Based on machine-hours During June, the plant produced 15.000 pools and incurred the following costs: a. Purchased 60,000 pounds of materials at a cost of $4.95 per pound. b. Used 49.200 pounds of materials in production (Finished goods and work in process inventories are Insignificant and can be ignored.) c Worked 11,800 direct labor-hours at a cost of $17.00 per hour. d. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: 1. Compute the following variances for June: a. Materials price and quantity variances. b. Labor rate and efficiency variances c. Variable overhead rate and efficiency variances. 2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month, Complete this question by entering your answers in the tabs below. Required 1 Required 2 1a. Compute the following variances for Dune, materials price and quantity variances 1b. Compute the following variances for June, labor rate and efficiency variances ic. Compute the following variances for June, variable overhead rate and efficiency variances (Do not round your intermediate calculations. Indicate the effect of each variance by selecting " for favorable, "U" for unfavorable, and "None for no effect (.e., zero variance). Input all amounts as positive values.) Show less 1a. Material price variance Material quantity variance 1b. Labor rate variance Complete this question by entering your answers in the tabs below. Required 1 Required 2 1a. Compute the following variances for June, materials price and quantity variances. 1b. Compute the following variances for June, labor rate and efficiency variances. 1c. Compute the following variances for June, variable overhead rate and efficiency variances. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (ie, zero variance). Input all amounts as positive values.) Show less Ook Print 10 brences 1a. Material price variance Material quantity variance 1b. Labor rate varianco Labor efficiency variance Te Variable overhead rate variance Variable overhead efficiency variance It is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: 1. Compute the following variances for June: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances 2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month Complete this question by entering your answers in the tabs below. Required i Required 2 Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. (Indicate the effect of each variance by selecting "Fifor favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input all amounts as positive values.) Net variance

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting An Introduction To Concepts Methods And Uses

Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil, Sidney Davidson

7th Edition

0030259630, 978-0030259630

More Books

Students also viewed these Accounting questions

Question

What is the affect heuristic? How is it likely to be costly?

Answered: 1 week ago

Question

What are the diff erences between groups and teams?

Answered: 1 week ago

Question

If you were Dans friend, what might you say to alter his behaviors?

Answered: 1 week ago