Problem 11-15 Comprehensive Variance Analysis [LO11-1, L011-2, LO011-3] 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: BudgetedActual $255,000 Sales (7,000 pools) Variable expenses: 255,000 Variable cost of goods sold 85,400 15,000 15,00 100,400 104,590 Variable selling expenses Total variable expenses Contribution margin Fixed expenses: 119,590- 154,600 135,410 Selling and administrative Total fixed expenses Net operating income 64,000 79,000 143,000 $11,600$ (7,590) 64,000 79,000 143,000 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 Price Standard Standard Quantity or Hours or Rate Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost 4.0 pounds 0.3 hours 0.2 hours 2.40 per pound $7.00 per hour S 9.60 2.10 0.50 $ 12.20 $2.50 per hour Based on machine-hours During June the plant produced 7,000 pools and incurred the following costs: a. Purchased 33,000 pounds of materials at a cost of $2.85 per pound. b. Used 27,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 2,700 direct labor-hours at a cost of $6.70 per hour d. Incurred variable manufacturing overhead cost totaling $4,930 for the month. A total of 1,700 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. (indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Material price variance Material quantity variance b. Labor rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labor rate variance Labor efficiency variance c. 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 (i.e., zero variance).) Variable overhead rate variance Variable overhead efficiency variance 2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. (Input all values as positive amounts. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) ary of variances: Material price variance Material quantity variance Labor rate variance Labor efficiency variance Variable overhead rate variance Variable overhead efficiency variance Net variance 3. Pick out the two most significant variances that you computed in (1) above. (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) Materials price variance Labor eficlenoy variance Variable overhead efficiency variance Labor rate variance 2 Variable overhead rate variance 2Materials quantity variance