Question

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 Sales (6,000 pools) Varlable expenses: Variable cost of goods sold Variable selling expenses Total variable expenses Contribution margin Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses $ 225,000 225,8e0 73,620 88,700 17,000 105,700 119,300 17,000 90,620 134,380 53,000 68,000 53,000 68,000 121,000 121,000 $ 13,380 (1,7e0) Net operating income (loss) Contains direct materials, direct labor, and variable manufacturing overhead.

Answer 1

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Miller Toy Company	Finished Units	Input per unit	Input required	Rate per unit	Amount
Answer 1 a
Direct Material Variance
Standard Price allowed for Actual Output at Standard Price	6,000.00	3.30	19,800.00	2.30	45,540.00	A
Actual Quantity of Input used at Standard Price			19,600.00	2.30	45,080.00	B 1
Quantity Variance (B 1-A)					(460.00)	Favorable
Actual Quantity of materials purchased at Standard Price			24,800.00	2.30	57,040.00	B 2
Actual cost of materials			24,800.00	2.75	68,200.00	C
Price Variance (C-B 2)					11,160.00	Unfavorable
Total Material Variance					10,700.00	Unfavorable
Answer 1 b
Direct Labor Variance
Standard Hours allowed for Actual Output at Standard Rate	6,000.00	0.60	3,600.00	6.30	22,680.00	D
Actual Hours of Input, at Standard Rate			4,200.00	6.30	26,460.00	E
Actual Hours of Input, at Actual Rate			4,200.00	6.00	25,200.00	F
Efficiency Variance (E-D)					3,780.00	Unfavorable
Price Variance (F-E)					(1,260.00)	Favorable
Total Labor Variance (F-D)					2,520.00	Unfavorable
Answer 1 c
Variable Overhead Variance
Standard Hours allowed for Actual Output at Standard Rate	6,000.00	0.50	3,000.00	1.80	5,400.00	G
Actual Hours of Input, at Standard Rate			3,300.00	1.80	5,940.00	H
Actual Hours of Input, at Actual Rate					7,260.00	I
Variable overhead efficiency variance (H-G)					540.00	Unfavorable
Variable overhead Spending variance (I-H)					1,320.00	Unfavorable
Total Variable overhead variance (I-G)					1,860.00	Unfavorable
Answer 2
Total variance					Amount $
Total Material Variance					10,700.00	Unfavorable
Total Labor Variance					2,520.00	Unfavorable
Total Variable overhead variance					1,860.00	Unfavorable
Total variance for the month					15,080.00	Unfavorable