Check my work Miller Toy Company manufactures a plastic swimming pool at its as
ID: 2508926 • Letter: C
Question
Check my work Miller Toy Company manufactures a plastic swimming pool at its as shown by its June contribution format income statement below Westwood Plant. The plant has been experiencing problems Sales (3,000 pela) Variable expenses Variable cost of goods sold* 3,390 44,540 Variable selling expenses Total variable expenses Contribution margin Pixed expense 11,000 134,510 123,460 50.00050,000 125,000 125-000 Manufacturing overhead Selling and administrative Total fixed expenses Net operating income (loss) 9.610(1.540) 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 variable cost of goods sold. She has been provided with the following standard cost per swimming pool: Upon reviewing the plant's income statement, Ms. Dunn has concluded that the major problem lies in the Standard Quant.ity or Standard Price standar Direet materials Direot labor Varlable manufacturing overhead Total standard cost per unit 3.6 pounds # 2.00 per pound 0.5 0.3 houra2.10 per hour 7.20 3.30 0-63 s bours 5 6.60 per hour 11.13 Based on machine-hours. 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)Explanation / Answer
1 a. Material price variance = (AQ x AP) - (AQ x SP)
=(15,800 x 2.45) - (15,800 x 2)
= 7,110 U
Material quantity variance = (AQ x SP) - (SQ x SP)
= (10,600 x2) - [(3000 x 3.60) x 2)]
= 400 F
1. b Labor rate variance = (AH x AR) - (AH x SR)
=(2100 x 6.30) - (2100 x 6.60)
= 630 F
Labor efficiency variance = (AH x SR) - (SH x SR)
= (2100 x 6.60) - [ (3000 x .5) x 6.60]
= 3960 U
1 c. Variable overhead rate variance = (AH x AR) - (AH x SR)
= (3000) - (1200 x 2.10)
= 520 U
Variable overhead efficiency variance = (AH x SR) - (SH xSR)
= (1200 x 2.10) - [(3000 x .3) x 2.10]
= 630 U
Variance Analysis
Material price variance = 7110 U
Material quantity variance = 400 F
Labor rate variance = 630 F
Labor efficiency variance = 3960 U
Variable overhead rate variance = 520 U
Variable overhead efficiency variance = 630 U
Net variance for the month = 11,190 U