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:

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 (6,000 pools) 273,000 273,000 Variable expenses: Variable cost of goods sold 83,460 102,050 24.000 24.000 Variable selling expenses Total variable expenses 107,460 126.050 Contribution margin 165,540 146.950 Fixed expenses: Manufacturing overhead 65.000 65,000 Selling and administrative 90,000 90,000 Total fixed expenses 155.000 155,000 Net operating income (loss) 10,540 (8,050) *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 Quantity Standard Price Standard or Hours or Rate Cost Direct materials 4.0 pounds S2.60 per pound 10.40 Direct labor 0.3 hours 8.10 per hour 2.43 Variable manufacturing overhead 0.3 hours S3.60 per hour 1.08 Total standard cost 13.91 "Based on machine-hours. During June the plant produced 6,000 pools and incurred the following costs a. Purchased 29,000 pounds of materials at a cost of $3.05 per pound b. Used 23,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 2,400 direct labor-hours at a cost of $7.80 per hour. d. Incurred variable manufacturing overhead cost totaling $8,400 for the month. A total of 2,100 machine-hours was recorded It is the company's policy to close all variances to cost of goods sold on a monthly basis