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PROBLEM 9-18 Comprehensivo Variance Analysis LO9-49, LO9-5, LO9-69 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 $675,000 Actual $675,000 Sales (15,000 pools) Variable expenses Variable cost of goods sold" Variable selling expenses Total variable expenses Contribution margin Fixed expenses Manufacturing overhead Selling and administrative Total foed expenses Net operating income (loss) 435,000 20,000 455,000 220,000 461,890 20,000 481,890 193,110 130,000 84,000 214,000 $ 6,000 130,000 84,000 214,000 $ (20,890 Contains direct materials, direct labos and veriable manufacturing overhead N Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to "get Page 432 things under control. Upon reviewing the plant's income statement, Ma 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 Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity or Hours 3.0 pounds 0.8 hours 0.4 hours Standard Price Standard or Rate Cost $5.00 per pound $15.00 $16.00 per hour 1280 $3.00 per hour 120 $29.00 Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to "get Page 132 things under control." Upon reviewing the plant's income statement, Ma 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 Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Quantity Standard Price Standard or Hours of Rate Cost 3.0 pounds $5.00 per pound $15.00 0.8 hours $16.00 per hour 12.80 0.4 hours $3.00 per hour 120 $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 car be ignored.) c Worked 11,800 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-hour 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 b. Labor rate and efficiency variances Variable overhead rate and efficiency variances 2. Summarize the vanances that you computed in (1) above by showing the net overall favorable or unfavorable variance for 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 What impact did this figure here on the company's income statement? Show computations 3. Pick out the two most significant vanances that you computed in (1) above. Explain to Ms. Dunn possible causes of these Variances

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