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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
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 be
Problem 11-15 Comprehensive Variance Analysis L011-1, L011-2, L011-3 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: Budgeted Actual $272,000 272,000 Sales (5,000 pools) Variable expenses: Variable cost of goods sold" 99,765 84,250 23,000 Variable selling expenses 23,000 Total variable expenses 07.250 22,765 164,750 49,235 Contribution margin Fixed expenses: Manufacturing overhead 64.000 64,000 Selling and administrative 89,000 89,000 Total fixed expenses 153.000 53,000 Net operating income 11,750 (3,765) *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 Price Standard Standard Quantity or Hours or Rate Direct materials 3.9 pounds $2.50 per pound 9.75 0.8 hours Direct labor $8.00 per hour 6.40 Variable manufacturing overhead 0.2 hours' $3.50 per hour 0.70 Total standard cost 16.85Step by Step Solution
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