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Problem 10-15 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] 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: Budgeted Actual 240,000 240,000 Sales (8,000 pools) Variable expenses Variable cost of goods sold* 94,000 112,470 10,000 Variable selling expenses 10,000 Total variable expenses 104,000 122,470 Contribution margin 136,000 117,530 Fixed expenses: 55,000 55,000 Manufacturing overhead 70,000 Selling and administrative 0.000 Total fixed expenses 125,000 125,000 11,000 (7,470) Net operating income (loss) *Contains direct materials, direct labor, a 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 Standard Price Standard or Hours Cost or Rate $2.50 per pound 8.75 Direct materials 3.5 pounds Direct labor 0.4 hours $6.50 per hour 2.60 $2.00 per hour Variable manufacturing overhead 0.2 hours 0.40 11.75 Total standard cost

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