**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.)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.**Required:**1. Compute the following variances for June: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances.2. Summarize the variances you computed in requirement 1 by showing the net overall favorable or unfavorable variance for the month.**Complete this question by entering your answers in the tabs below.**- Required 1- Required 21a. Compute the following variances for June, materials price and quantity variances.1b. Compute the following variances for June, labor rate and efficiency variances.1c. Compute the following variances for June, variable overhead rate and efficiency variances. **Miller Toy Company** manufactures a plastic swimming pool at its Westwood Plant. The plant is experiencing problems as shown by its June contribution format income statement below:### Income Statement| Details | Flexible Budget | Actual ||-------------------------------------|-----------------|------------|| Sales (3,000 pools) | $179,000 | $179,000 || **Variable expenses:** | | || Variable cost of goods sold* | 33,390 | 44,540 || Variable selling expenses | 11,000 | 11,000 || Total variable expenses | 44,390 | 55,540 || **Contribution margin** | 134,610 | 123,460 || **Fixed expenses:** | | || Manufacturing overhead | 50,000 | 50,000 || Selling and administrative | 75,000 | 75,000 || Total fixed expenses | 125,000 | 125,000 || **Net operating income (loss)** | $9,610 | $(1,540) |\*Contains direct materials, direct labor, and variable manufacturing overhead.### Managerial ReviewJanet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to "get things under control." Upon reviewing the plant's income statement, Ms. Dunn concluded the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:### Standard Cost Per Swimming Pool| Category | Standard Quantity or Hours | Standard Price or Rate | Standard Cost ||---------------------------------|----------------------------|------------------------|---------------|| Direct materials | 3.6 pounds | $2.00 per pound | $7.20 || Direct labor | 0.5 hours | $6.60 per hour | $3.30 || Variable manufacturing overhead | 0.3 hours\* | $2.10 per hour | $0.63 || **Total standard cost per unit**| | | **$11.13** |\*Based on machine-hours.

Name: **Based on machine-hours.**During June, the plant produced 3,000 pool
Uploaded: 2024-03-20T06:32:49.000Z
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Description: **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 i

Variance analysis Analysis of differences between planned and actual behavior. After analyzing differences, companies find the reasons for variance so that the necessary steps can be taken to correct that variance.Standard costing: Under this costing method, the expected costs are used in the accounting records in place of actual costs and then these expected costs are compared with actual costs to analyze the variances. This costing method is useful in cost management and control.Direct materials: It is the basic input required to manufacture the finished products. Raw materials are processed by incurring conversion costs and other overhead to convert them into finished products.Direct labor: It is the cost of salaries and wages incurred directly to produce a product. This cost is incurred to convert the raw materials into finished product.Manufacturing overhead: It is the indirect cost incurred as a part of manufacturing the products. These costs are not directly related to the units manufactured. They are allocated to the manufactured units based on estimated cost drivers.1-a)Material price varianceAmountFav/Unfav(Actual price - standard price )* AQ purchased($2.45-$2.00)*15,8007110UMaterials Quantity variance(AQ used - SQ allowed)*Standard price(10,600- 3000*3.6)*$2.00400F1-b)Labor rate variance(Actual rate - standard rate)*Actual hours($6.30-$6.60)*2,100630FLabor Efficiency variance(Actual hours - standard hours allowed)* Std rate(2,100-3,000*0.5)*$6.603960U1-c)Variable overhead rate variance(Actual rate - standard rate)*Actual machine hours(($3,000 /1200) - $2.10)*1200)480UVariable overhead Efficiency variance(Actual hours - standard hours allowed)* Std rate(1200- 3000*0.3)*$2.10630USolution (2)Net variance = 7110 + 3960 + 480 + 630 -400 - 630 = 11150 U1a)Material price variance7110UMaterials Quantity variance400F1-b)Labor rate variance630FLabor Efficiency variance3960U1-c)Variable overhead rate variance480UVariable overhead efficiency variance630USolution (2)Net Variance = 11150 U