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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: Plexible Budget $ 200,000 Actual $ 200,000 Bed Sales (5,000 poola) 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) 54,100 16,000 70,100 129,900 67,330 16,000 B3, 330 116,670 7 52,000 67,000 119,000 $ 10,900 52,000 67,000 119,000 $ (2,330) Cost 3.10 0.68 $ 10.82 *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 lles in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool: Standard Quantity or Standard Price or Standard Hours Rate Direct materials 3.2 pounds $ 2.20 per pound $ 7.04 Direct labor 0.5 hours $ 6.20 per hour Variable manufacturing overhead 0.4 hours $ 1.70 per hour Total standard cont per unit Based on machine hours. During June, the plant produced 5,000 pools and incurred the following costs: a. Purchased 21,000 pounds of materials at a cost of $2.65 per pound. b. Used 15,800 pounds of materials in production (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 3,100 direct labor-hours at a cost of $5.90 per hour. d. Incurred variable manufacturing overhead cost totaling $4,830 for the month. A total of 2,300 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 b. Labor rate and efficiency variances c. Variable overhead rate and Miciency 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. 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. 2. Summarize the varlances 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 (l.e., zero variance). Input all amounts as positive values.) Show less SO 1a. Material price variance 1a. Material quantity variance 1b. Labor rate variance 1b. Labor efficiency variance 1c. Variable overhead rate variance 10. Vanable overhead efficiency variance $ (9.450) U $ 440 F S 930 F $ (3,720) U $ (920) U $ (510) U ooo Raduled Required 2 > Required: 1. 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. 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 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 (.e. zero variance). Input all amounts as positive values.) Net variance U (13,230)
