Question

please answer the required 1-2, thank you!

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 Budget Actual Sales (7,000 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 $235,000 $235,000 78,540 96,420 18,000 18,000 114,420 120,580 96,540 138,460 54,000 54,000 69,000 123,000 69,000 123,000 Net operating income (loss) 15,460 $ (2,420) "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 $2.40 per pound 6.40 per hour $1.90 per hour 3.4 pounds $ 8.16 Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit 0.3 hours 1.92 0.6 hours 1.14 $11.22 Based on machine-hours. ninn m hn nlant neAdend 7nnn nnnle nnd ineeend the falladnn PAnten <Prev 3 of 6 Next

Answer 1

1.

Compute the following variances for june:

a.

Material price and quantity variances:

Material price variance = (Standard price * Actual quantity) - (Actual price * Actual quantity)

= ($2.4 * 23,600) - ($2.85 * 23,600)

= $56,640 - 67,260

Material price variance = - $10,620 Unfavorable

Material quantity variance = (Standard price * Standard quantity) - (Standard price * Actual quantity)

Standard quantity = Actual production * Standard quantity per unit

= 7,000 * 3.4

= 23,800 pounds

Material quantity variance = ($2.4 * 23,800) - ($2.4 * 23,600)

= $57,120 - 56,640

Material quantity variance = $480 Favorable

b.

Labor rate and efficiency variances:

Labor rate variance = (Standard rate * Actual hours) - (Actual rate * Actual hours)

= ($6.4 * 2,700) - ($6.10 * 2,700)

= $17,280 - 16,470

Labor rate variance = $810 Favorable

Labor efficiency variance = (Standard rate * Standard hours) - (Standard rate * Actual hours)

Standard hours = Actual production * Standard hours allowed per unit

= 7,000 * 0.3

= 2,100 direct labor hours

Labor efficiency variance = ($6.4 * 2,100) - ($6.4 * 2,700)

= $13,440 - 17,280

= - $3,840 Unfavorable

c.

Variable overhead rate and efficiency variances:

Variable overhead rate variance = (Standard rate * Actual hours) - (Actual rate * Actual hours)

= ($1.9 * 4,500) - $10,350

= $8,550 - 10,350

Variable overhead rate variance = - $1,800 Unfavorable

Variable overhead efficiency variance = (Standard rate * Standard hours) - (Standard rate * Actual hours)

   Standard hours = Actual production * Standard hours allowed per unit

= 7,000 * 0.6

= 4,200 machine hours

Variable overhead efficiency variance = ($1.9 * 4,200) - ($1.9 * 4,500)

= $7,980 - 8,550

Variable overhead efficiency variance = - $570 Unfavorable

2.

Summarize the variances:

Material price variance	- $10,620
Material quantity variance	$480
Labor rate variance	$810
Labor efficiency variance	- $3,840
Variable overhead rate variance	- $1,800
Variable overhead efficiency variance	- $570
Net variance	- $15,540