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Question 5

CoursHeroTranscribedText: 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 (3,080 pools) 258,080 $ 258,088 variable expenses: Variable cost of goods sold* BETES 67,080 Variable selling expenses 26, 080 26,080 Total variable expenses 93,080 Contribution margin 178,578 157,080 Fixed expenses: Manufacturing overhead Selling and administrative 92, 080 92, 080 Total fixed expenses 159,880 159,080 Net operating income (loss) 11,578 "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 Rate Cost Direct materials 4.2 pound $ 2.80 per pound $ 11.76 Direct labor B.5 hours 8. 30 per hour 4.15 Variable manufacturing overhead 8.5 hours 3.80 per hour 1.98 Total standard cost per unit 17. 81 *Based on machine-hours. During June, the plant produced 3,000 pools and incurred the following costs: 8. Purchased 17,600 pounds of materials at a cost of $3.25 per pound. b. Used 12,400 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 $8.00 per hour. d. Incurred veriable manufacturing overhead cost totaling $7.560 for the month. A total of 1,800 machine-hours 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. 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 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. Material price variance Material quantity variance 1b. Labor rate variance ificiency variance do. Variable overhead rale variance Variable overhead efficiency variance

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