Miller Toy Company manufactures a plastic swimming pool at i

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: BudgetedActual $310,000 $310,000 Sales (7,000 pools) Variable expenses Variable cost of goods sold Variable selling expenses 110,810 131,685 25,000 25,000 135.810 156.685 174,190 153,315 Total variable expenses Contribution margin Fixed expenses Manufacturing overhead Selling and administrative 66,000 66,000 91,000 91,000 157.000 157.000 S 17,190 $ (3,685) Total fixed expenses Net operating income (loss) Contains direct materials, direct labor, and variable manufacturing overhead

Solution

1-a) Material price variance (Actual price - standard price )* AQ purchased (3.15-2.70)*33700 15165 U Materials Quantity variance (AQ used - SQ allowed)*Standard price (28,500 - 7000*4.1)*2.70 540 F 1-b) Labor rate variance (Actual rate - standard rate)*Actual hours (7.90 - 8.20)*3,400 1020 F Labor Efficiency variance (Actual hours - standard hours allowed)* Std rate (3,400 - 7000*.4)*8.20 4920 U 1-c) Variable overhead rate variance (Actual rate - standard rate)*Actual machine hours (4.1 - 3.70)*3,100 1240 U Variable overhead Efficiency variance (Actual hours - standard hours allowed)* Std rate (3100 - 7000*.4)*3.70 1110 U 2) Net Variance 20875 U Material price variance 15,165 U Material quantity variance 540 F labor rate variance 1020 F labor efficiecny variance 4920 U variable overhead rate variance 1240 U variable overhead efficiency variance 1110 U net variance 20,875 U 3) material price variance labor efficiency variance