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 Sales (8,000 pools) Variable expenses: $265,000 S 265,000 Variable cost of goods sold 88,960 16,000 Variable selling expenses Total variable expenses Contribution margin Fixed expenses: 106,490 16,000 122,490 142,510 160,040 Manufacturing overhead Selling and administrative 65,000 80,000 145,000 $15,040 S (2,490) 65,000 80,000 145,000 Total fixed expenses Net operating income 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 Standard Price or Rate Standard Quantity or Hours Cost 3.0 pounds 0.4 hours 0.3 hours* $ 7.50 2.84 0.78 S 11.12 $2.50 per pound Direct materials Direct labor Variable manufacturing overhead Total standard cost $7.10 per hour $2.60 per hour