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 Dudget Actual $239,000 $225,000 sales (7.000 pools) Variable expenses Variable cost of goods sold Variable selling expenses Total variable expenses Contribution margin Yixed expenses Manufacturing overhead Selling and administrative Total Fixed expenses Net operating Income (10) 78,540 96,420 18,000 18,000 96,540 114, 420 13171460 120,50 54,000 54,000 69,000 69,000 123.000 122,000 $ 15,460 (2,420) *Contains direct materials, direct lobor, 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 Tours orate coat Direct materials 3.4 pound $ 2.40 per pound 50.16 Direct labor 0.3 hours $.6.40 per hour 1.92 Variable manufacturing overhead 0.6 hours 51.90 per hour Total standard cost per unit 511.22 "Based on machine-hours. Total standard cost per unit $. 11.22 "Based on machine-hours. During June the plant produced 7000 pools and incurred the following costs: a. Purchased 28.800 pounds of materials at a cost of $2.85 per pound, b. Used 23,600 pounds of materials in production (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 2,700 direct labor-hours at a cost of $6.10 per hour. d. Incurred variable manufacturing overhead cost totaling $10.350 for the month. A total of 4,500 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. (Note that the amount of materials purchased is different from the amount of materials used see the Chapter 9 slides if you don't recall why this matters for the materials 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 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 (.e., zero variance). Input all amounts as positive values.) Show less 1a. Material price variance Material quantity variance 1b. Labor rate variance Labor officiency variance 10. Variable overhead rate variance Variable overhead officiency variance Required 2 > 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 "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input the amount as positive value.) Net variance
