Homework Problems Miller Toy Company manufactures a plastic swimming pool at its

Question

Homework Problems Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant The piant hes been experiencing problems as shown by its June contribution format income statement below Budget Aetual Sales (8.000 poola) 263 000 5265 000 variable cost of goods sold Variable selling expenses 88,960 106,490 0 6,000 Contr Lbution margin Pixed expensess 160 040142 510 Manufacturing overhend 65,000 5,00 administrati Total fixed expeno Contains direct materials, direct isbor, and variable manufacturing overhead controlUpon reviewing the plant's income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of 145 090 345 15,040 12.4901 ces Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to "get things under goods sold. She has been provided with the following standard cost per swimming pool Quantity or Stndard Price 3.0 pounds2-50 per pousd 7-50 0-3 hours 2.60 per hour naterials Varlable sanefaeturing overhesd Total sandand cost per Based on machine-hours During June, the plant produced 8,000 pools and incurred the following costs: . Purchased 29,000 pounds of materials at a cost of $2.95 per pound. b. Used 23,800 pounds of materials in production.(Finished goods and work in process inventories are insignificant and can be ignored) C. Worked 3,800 direct labor hours at a cost of $6.80 per hour d. Incurred varlable manufacturing overheed cost totaling $8100 for the month A total of 2,700 machine-hours was h is the company's policy to close all variances to cost of goods sold on a monthly basis Required: L Compute the following varlances for June: a Materials price and quantity b. Labor rate and efficiency variances C Variable overhead rate and efficiency variances 2. Summarize the variances that you computed in (t) above by showing the net overall fevorable or unfevorable variance for the month. Complete this question by entering your answers in the tabs below. C Prev2a4 ili Next >

Explanation / Answer

1 a Material price Variances (Standard Rate - Actual Rate)*Materials Purchased (2.50-2.95)*29000 -13050 U Material quantity variances (Standard Quantity- Actual Quantity)*Standard rate ((3*8000)-23800)*2.50 500 F b Labor Rate Variances (Standard Rate - Actual Rate)*Actual Hours worked (7.10-6.80)*3800 1140 F Labor Efficiency Variance (Standard Hours- Actual hours)*Standard rate ((8000*0.40)-3800))*7.10 -4260 U c Variable overhead rate (Standard Rate - Actual Rate)*Actual Hours worked (2.60-(8100/2700))*2700 -1080 U Variable Efficiency Variance (Standard Hours- Actual hours)*Standard rate ((8000*.30)-(2700))*2.60 -780 U 2 Material Variance Price -13050 U Quantity 500 F -12550 U Labor Variance Rate 1140 F Efficiency -4260 U -3120 U Variable overhead rate Rate -1080 U Efficiency -780 U -1860 U -17530 U

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