Question

Check my work 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 Actual Budget $ 275,000 $275,000 ints Sales (4,000 pools) Variable expenses: Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses Net operating income (loss) 74,720 27,000 101,720 173,280 90,040 27,000 117,040 157,960 eBook 68,200 93, 000 161,000 12,280 $ 68,000 93,900 161,000 (3,040) Print $ "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 Price or Rate Standard Quantity or Hours 4.3 pounds 0.6 hours 0.3 hours* Standard Cost $12.47 5.04 1.17 Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit $ 2.90 per pound $ 8.40 per hour $ 3.90 per hour $ 18.68 *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. b. Used 17,000 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be

Answer 1

1-a)	Material price variance
	(Actual price - standard price )* AQ purchased
	(3.35-2.90)*22,200
	9990	U
	Materials Quantity variance
	(AQ used - SQ allowed)*Standard price
	(17000 - 4000*4.3)*2.9
	580	F
1-b)	Labor rate variance
	(Actual rate - standard rate)*Actual hours
	(8.10-8.40)*3000
	900	F
	Labor Efficiency variance
	(Actual hours - standard hours allowed)* Std rate
	(3000 -4000*.6)*8.4
	5040	U
1-c)	Variable overhead rate variance
	(Actual rate - standard rate)*Actual machinehours
	(6450 -1500*3.90)
	600	U
	Variable overhead Efficiency variance
	(Actual hours - standard hours allowed)* Std rate
	(1500 -4000*.3)*3.90
	1170	U
2)	Net Variance		15,320	U
	Material price variance				9,990	U
	Material quantity variance				580	F
	labor rate variance				900	F
	labor efficiecny variance				5040	U
	variable overhead rate variance				600	U
	variable overhead efficiency variance				1170	U
	net variance				15,320	U
1-a)	Material price variance
	(Actual price - standard price )* AQ purchased
	(3.35-2.90)*22,200
	9990	U
	Materials Quantity variance
	(AQ used - SQ allowed)*Standard price
	(17000 - 4000*4.3)*2.9
	580	F
1-b)	Labor rate variance
	(Actual rate - standard rate)*Actual hours
	(8.10-8.40)*3000
	900	F
	Labor Efficiency variance
	(Actual hours - standard hours allowed)* Std rate
	(3000 -4000*.6)*8.4
	5040	U
1-c)	Variable overhead rate variance
	(Actual rate - standard rate)*Actual machinehours
	(6450 -1500*3.90)
	600	U
	Variable overhead Efficiency variance
	(Actual hours - standard hours allowed)* Std rate
	(1500 -4000*.3)*3.90
	1170	U
2)	Net Variance		15,320	U
	Material price variance				9,990	U
	Material quantity variance				580	F
	labor rate variance				900	F
	labor efficiecny variance				5040	U
	variable overhead rate variance				600	U
	variable overhead efficiency variance				1170	U
	net variance				15,320	U