Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The standard cost for one pool is as follows Standard Quantity or Hours 1.40 kilograms Standard Price or Standard Rate Direct materials Direct labour Variable manufacturing overhead $5.00 per kilogram $6.00 per hour 2.00 per machine-hour Cost $ 7.00 4.80 0.80 0.80 hours machine- 0.40 hours Total standard cost S 12.60 The plant has been experiencing problems for some time, as is shown by its June income statement when it made and sold 14,800 pools, the normal volume is 14,950 pools per month. Fixed costs are allocated using machine-hours Flexible Budgeted Actual Sales (14,800 pools) $444,000 $444,000 Less: Variable expenses Variable cost of goods sold 186,480 193,250 Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses 19,700 206,180 212,950 237,820 231,050 19,700 Manufacturing overhead Selling and administrative 128,000 82,880 128,000 82,880 210,880 210,880 $ 26,940 $ 20,170 Total fixed expenses Net income Contains direct materials, direct labour, and variable manufacturing overhead Janet Dunn, the general manager of the Westwood Plant, wants to get things under control. She needs information about the operations in June since the income statement signalled that the problem could be due to the variable cost of goods sold. Dunn learns the following about operations and costs in June a. 31,200 kilograms of materials were purchased at a cost of $4.00 per kilogram b. 24,500 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) c. 11,800 direct labour-hours were worked at a cost of $7 per hour d. Variable manufacturing overhead cost totalling $19,350 for the month was incurred. A total of 4,300 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. Direct materials price and quantity variances. (Indicate the effect of each variance by selecting for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Required: 1. Comput e the following variances for June: a. Direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Material price variance Material quantity variance b. Direct labour rate and efficiency variances. (Indicate the effect of each variance by selecting "F"for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Labour rate variance Labour efficiency variance c. Variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Variable overhead spending variance Variable overhead efficiency variance 2-a. Summarize the variances you computed in part (1) by showing the net overall favourable or unfavourable variance for the month. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) et variance 2-b. What impact did this figure have on the company's income statement? This will cause the Cost of Goods Sold tothereby net income by that amount 3. Pick out the two most significant variances you computed in part (1). (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) 2 Materials price variance 2 Materials quantity variance Labour rate variance Variable overhead efficiency variance Variable overhead spending variance 2 Labour efficiency variance 4. Compute the fixed overhead cost variances. (Round intermediate calculation to 2 decimal places. Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Fixed overhead budget variance Fixed overhead volume variance