Problem 10-15 Comprehensive Variance Analysis [L010-1, LO10-2, LO10-3] 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 (15, 000 pools) Variable expenses $675, 000 675, 000 Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Fixed epenses 435, 000 20, 000 455, 000 220, 000 461, 890 20, 000 481, 890 193, 110 Manuf acturing overhead 130, 000 84, 000 214, 000 130, 000 84, 000 214, 000 (20, 890) Selling and administrative Total fixed expenses Net operating income loss) $6, 000 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 Standar d or Hours 3.0 pounds 0.8 hours 0.4 hours* or Rate Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit $5.00 per pound $16.00 per hour $3.00 per hour $15.00 12. 80 .20 $29.00 Based on machine-hours During June, the plant produced 15,000 pools and incurred the following costs a. Purchased 60,000 pounds of materials at a cost of $4.95 per pound b. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 11,800 direct labor-hours at a cost of $1700 per hour d. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machine-hours was recorded It is the company's policy to close all variances to cost of goods sold on a monthly basis