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 Budget Actual

Sales pools $ $

Variable expenses:

Variable cost of goods sold

Variable selling expenses

Total variable expenses

Contribution margin

Fixed expenses:

Manufacturing overhead

Selling and administrative

Total fixed expenses

Net operating income loss $ $

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 plants 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 Hours Standard Price or Rate Standard Cost

Direct materials pounds $ per pound $

Direct labor hours $ per hour

Variable manufacturing overhead hours $ per hour

Total standard cost per unit $

Based on machinehours.

During June the plant produced pools and incurred the following costs:

Purchased pounds of materials at a cost of $ per pound.

Used pounds of materials in production. Finished goods and work in process inventories are insignificant and can be ignored.

Worked direct laborhours at a cost of $ per hour.

Incurred variable manufacturing overhead cost totaling $ for the month. A total of machinehours was recorded.

It is the companys policy to close all variances to cost of goods sold on a monthly basis.

Required:

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.

Summarize the variances that you computed in above by showing the net overall favorable or unfavorable variance for the month.