Problem 9-18 Comprehensive Variance Analysis (L09-4, LO9-5, L09-6] 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 Actuat Sales (4,000 pools) $.275,000 $275,000 Variable expensest Variable cost of goods solde 74,720 99,040 Variable selling expenses 22.000 27,000 Total variable expenses 101720 117, 040 Contribution margin 173,288 157 960 Fixed expensest Manufacturing overhead 68,000 68,000 Selling and administrative 93.000 93,000 Total fixed expenses 101 000 161,000 Net operating income (lass) $ 12,288 $ (3,040) *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 or Standard Price Standard Hours or Rath Cost Direct materials 4.3 pounds 5 2.90 per pound $12.47 Direct labor 0.5 hours $ 8.40 per hour 5.4 Variable manufacturing overhead 0.3 hours $ 3.90 per hour 1.17 Total standard cost per unit 10.6 Based on machine-hours, During June the plant produced 4,000 pools and incurred the following costs a. Purchased 22,200 pounds of materials at a cost of $3.35 per pound 6. Used 17,000 pounds of materials in production (Finished goods and work in process inventories are insignificant and can be Ignored) Worked 3.000 direct labor hours at a cost of $8.10 per hour incurred variable manufacturing overhead cost totaling $6,450 for the month A total of 1500 mochine-hours was recorded it is the company's policy to close all variances to cost of goods sold on a monthly basis Required 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 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 is. Compute the following variances for June, materials price and quantity variances 1b. Compute the following vacances for June, laborate and efficiency variances le. 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 for favorable for unfavorable, and "None for no effect, rere variance). Input all amounts as positive values.) ce Show 1a. Material price variance Material quantity variance Tb. Labore variance Labor efficiency in 1 Variable overhead rate variance Variable overhand efficiency variano Compute the following variances for June: Materials price and quantity variances. Labor rate and efficiency variances. Variable overhead rate and efficiency variances. Summarize the variances that you computed in (1) above Complete this question by entering your answers in ti Required 1 Required 2 Summarize the variances that you computed in (1) above by si month. (Indicate the effect of each variance by selecting "F" foi zero variance). Input the amount as positive value.) Net variance Required 1
