Question & Answer: alue: 10.00 points Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant The plant has been experien…..

value: 10.00 points 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 $225,000 $ 225,000 Sales (6,000 pools) Variable expenses 73,620 17,000 Variable cost of goods sold 88,700 17,000 Variable selling expenses Total variable expenses Contribution margin Fixed expenses: 90,620 105,700 134,380 119,300 Manufacturing overhead Selling and administrative 53,000 68,000 53,000 68,000 21,000 121,000 $ 13,380 (1,700) Total fixed expenses Net operating income (loss) Contains direct materials, direct labor, and variable manufacturing overhead Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been givern 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: Standard Quantity Standard Price Standard or Hours 3.3 pounds or Rate $2.30 per pound $6.30 per hour $1.80 per hour Cost Direct materials Direct labor Variable manufacturing overhead 0.5 hours S 7.59 3.78 0.90 Total standard cost S 12.27 Based on machine-hours. During June the plant produced 6,000 pools and incurred the following costs a. Purchased 24,800 pounds of materials at a cost of $2.75 per pound b. Used 19,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 4,200 direct labor-hours at a cost of $6.00 per hour. d. Incurred variable manufacturing overhead cost totaling $7,260 for the month. A total of 3,300 machine- hours was recorded It is the company’s policy to close all variances to cost of goods sold on a monthly basis.