Accounting Problem

Problem 2 - Comprehensive Variance Analysis - GC Toy Company manufactures a plastic swimming pool. The company has been experiencing problems as shown by its June contribution format income statement below: Sharon Lymon, who has just been appointed general manager of the manufacturing facility, has been given instructions to "get things under control." Upon reviewing the 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: During June the plant produced 3,000 pools and incurred the following costs: During June the plant produced 3,000 pools and incurred the following costs: a. Purchased 15,800 pounds of materials at a cost of $2.45 per pound. b. Used 10,600 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 $6.30 per hour, d. Incurred variable manufacturing overhead cost totaling $3,000 for the month. A total of 1,200 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis. 1. Compute the following variances for June (show your work): a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. Summanze the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month