PROBLEM 9-18 Comprehensive Variance Analysis L09-4.109-5.L09-66 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: I Flexible Budget Actual Sales (15.000 pools) 5675.000 $675.000 Variable expenses Variable cost of goods sold 435,000 461.890 Variabile selling expenses 20,000 20.000 Total variable expenses 455,000 481890 Contribution margin 220,000 193.110 Fored expenses Manufacturing overhead 130,000 130,000 Selling and administrative 84,000 84,000 Totalived expenses 214,000 24,000 Net operating income dos $ 6,000 $(20,890) Contas de material rect labor and ble manufacturing overhead who hojo bo pred general manager of the Westwood Mano bem prvem investime to get things under control presiewing the plant's increderent. Me Dhanehus the premies in the variable control Shehu been provided with the following and cont per dining rool 120 Die De Varble manufacturing and content Standard Quant Hours 10 Oh DA Standard Price orte $5.00 pound 116.00 per 3300 per hour Standard Cost $15.00 80 120 5900 Porin emisione WebS1700 4. century and consis.2001 te Amsters. We weled I policy will never goldes morchly basis Required Che following code Mind Vidi ve ther you the theorience to them. What did this we have on the che www.vices that you contine Expo M. Dean PROBLEM 9-18 Comprehensive Variance Analysis 09-4.L09-5, L09-6 Miley Company manne plante winning pool tits Westwood Plant. The plant has been experiencing problems shown by the contribution formato Mal be de Flexible Budget 1675.000 Actu 3675.000 Sales (15 000 Vespere Variable cost of goods sold Variable selling expenses Total variable expenses Cotton margir Fedexpens Mandaug overhead Selling and deve Totalted expenses Net operating income 05.000 20.000 255.000 220.000 16890 20.000 4000 1931110 110,000 14000 214,000 $ 0.000 130.000 14.000 24.000 520.8901 Contacted becandan Jantun, who has just been appointed general manager of the Westwood Plant, bus bon given to get things and cool previewing the plants in statement Mt Dunas concluded that the major problem is in the variable cost of goods sold. She has been provided with the following and cost per swimming pool Duet Due labor Varubio manufacturing ved To standard cost per uit Standard Quantity or Hours 30 pounds 03 hou 04 hours Standard Price orale $5.00 per pound $16.00 hour $300 per hour Standard Cont S1500 170 120 529 DO Bonus During June the plant produced 15.000 pools and incurred the following costs Purchased 60.000 pounds of materials at a cost of 54.95 per pound h Used 49,200 pounds of materials in production (Finished goods and work in process inventories are insignificant and can be ignored.) Worked 11.80l direct labor-hours at a cost of $17.00 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 hasta Required: Compute the following variances for June 1. 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 unfavorable variance the month. What impact did this figure have on the company's income statement Show computations 3. Pick out the two most significant variances that you computed in (1) above. Explain to Ms. Dunn possible cases of these variances