1 Problem 9-18 Comprehensive Variance Analysis (L09-4, LO9-5, LO9-6) ook es 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 (4,000 pools) $ 275,000 $275,000 Variable expenses: Variable cost of goods sold 74,720 90,840 Variable selling 27,000 expenses 27,000 Total variable expenses 101,720 117, 040 Contribution margin 173,280 157,960 Fixed expenses: Manufacturing overhead 68,000 68,000 Selling and administrative 93,000 93,000 Total fixed expenses 161,000 161,000 Net operating income (loss) $ 12,280 $ (3,040) int D rence *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 $2.99 per Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit Standard Standard Quantity Price Standard or Hours or Rate Cost 4.3 pounds pound $12.47 0.6 hours $8.40 per hour 5.04 0.3 hours* $3.90 per hour 1.17 $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 ignored.) c. Worked 3,000 direct labor-hours at a cost of $8.10 per hour d. Incurred variable manufacturing overhead cost totaling $6,450 for the month. A total of 1,500 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. 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 un variance for the month. Complete this question by entering your answers in the tabs below. Required Required 1 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 Labor efficiency variance Variable overhead rate 1c variance Variable overhead efficiency variance * Required 1 Required 2 > 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 insig can be ignored.) c. Worked 3.000 direct labor-hours at a cost of $8.10 per hour. d. Incurred variable manufacturing overhead cost totaling $6,450 for the month. A total of 1,500 machine-ho recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: 1. Compute the foliwing variances for June a. Materials price ad 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 unfavorabl variance for the month. Complete this question by entering your answers in the tabs below. Required Required 1 2 Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input the amount as positive value.) Show less Net variance