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 (7,000 pools) Variable expensest Variable cost of goods sold Variable selling expenses Total variable expenses Contribution margin Fixed expenses: Manufacturing overhead Selling and ministrative Total Tived expenses Net operating income (less) 104,990 15,00 15.00 100.400 119,50 13410 64.000 64. 29, 9.00 141,09 143,000 *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 Durinhas 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 Standard Quantity or Hours 4.0 poundt 0.3 hours 2.2 hours Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard price or Rate 52.40 per pound 5.7.00 per hour 52.50 per hour . $ 12.20 "Based on machine-hours During June, the plant produced 7000 pools and incurred the following costs. a. Purchased 33,000 pounds of materials at a cost of $2.85 per pound b Used 27800 pounds of materials in production (Finished goods and work in process inventories are insignificant and can be Ignored) c. Worked 2700 direct labor hours at a cost of $670 per hour dincurred variable manufacturing overhead cost totaling $4930 for the month A total of 1700 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 6 2 Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month 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 variance ic. Compute the following variance 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 "Nono" for no effect ( zero variance). Input all amount as positive values.) Show less 1a Material price variance Material quantity variance 1b Laborrate variance Labor efficiency variance 1 Variable overhead rate variance Variable overhead efficiency variance Reguleed 1 Required 2 > 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 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 for favorable, "U" for unfavorable, and "Mone" for no effect (e. zero variance) Input all amounts as positive values.)
