Problem 9-18 Comprehensive Variance Analysis (L09-4, L09-5, LO9-6] 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 (3,000 pools) $210,000 $210,000 Variable expenses: Variable cost of goods sold* 38, 220 49,235 Variable selling 15,000 15,000 expenses Total variable expenses 53, 220 64,235 Contribution margin 156,780 145, 765 Fixed expenses: Manufacturing overhead 66,000 66,000 Selling and administrative 81,000 81,000 Total fixed expenses 147,280 147,600 Net operating income (Loss) $ 9,780 $ (1,235) *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 Mes in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool Standard Standard Quantity Price Standard or Hours or Rate Cost Direct materials 3.1 $2.60 per pounds pound $ 8.06 Direct labor 0.5 hours $7.20 per hour 3.60 Variable manufacturing 0.4 overhead 1.08 hours* $2.78 per hour Total standard cost per unit $12.74 "Based on machine-hours. During June the plant produced 3,000 pools and incurred the following costs: a. Purchased 14,300 pounds of materials at a cost of $3.05 per pound. . Used 9.100 pounds of materials in production. (Finished goods and work in process Inventories are insignificant and can be ignored.) c. Worked 2,100 direct labor-hours at a cost of $6.90 per hour. a incurred variable manufacturing overhead cost totaling $4,650 for the month. A total of 1.500 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis Required: 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required 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 (i.e., zero variance). Input all amounts as positive values.) Show less 1a. 1b. V x Material price variance $6,4350 Material quantity variance $ 540XF Labor rate variance $ 630 IF Labor efficiency variance F 36,360 Variable overhead rate variance $ 150XU Variable overhead $ efficiency variance Red 1c. x 12.660F Required 2 > Complete this question by entering your answers in the tabs below. Required Required 1 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 (i.e., zero variance). Input the amount as positive value.) Show less Net variance
