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 (4,000 pools)	$ 275,000	$ 275,000
Variable expenses:
Variable cost of goods sold*	74,720	90,040
Variable selling expenses	27,000	27,000
Total variable expenses	101,720	117,040
Contribution margin	173,280	157,960
Fixed expenses:
Manufacturing overhead	68,000	68,000
Selling and administrative	93,000	93,000
Total fixed expenses	161,000	161,000
Net operating income (loss)	$ 12,280	$ (3,040)

*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	4.3 pounds	$ 2.90	per pound	$ 12.47
Direct labor	0.6 hours	$ 8.40	per hour	5.04
Variable manufacturing overhead	0.3 hours*	$ 3.90	per hour	1.17
Total standard cost per unit				$ 18.68

*Based on machine-hours.

During June the plant produced 4,000 pools and incurred the following costs:

Purchased 22,200 pounds of materials at a cost of $3.35 per pound.

Used 17,000 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

Worked 3,000 direct labor-hours at a cost of $8.10 per hour.

Incurred variable manufacturing overhead cost totaling $6,450 for the month. A total of 1,500 machine-hours was recorded.

It is the companys 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. (Hint: the amount of materials purchased is different from the amount of materials used in this problem - 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.