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Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The standard cost for one pool is as follows: Standard Quantity or Hours Standard Cost $5.60 1.40 kilograms 0.90 hours 0.30 machine-hours Direct materials Direct labour Variable manufacturing overhead Total standard cost Sales (15,200 pools) Less: Variable expenses: Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses: Manufacturing overhead Selling and administrative The plant has been experiencing problems for some time, as is shown by its June income statement when it made and sold 15,200 pools; the normal volume is 15,350 pools per month. Fixed costs are allocated using machine-hours. Total fixed expenses Net income Flexible Budgeted $ 456,000 190,000 20,300 210,300 245,700 Standard Price or Rate $4.00 per kilogram $7.00 per hour $2.00 per machine-hour 132,000 85,120 217,120 $ 28,580 Material price variance Material quantity variance Actual $ 456,000 205,690 20,300 225,990 230,010 132,000 85,120 217,120 $ 12,890 6.30 0.60 $12.50 Contains direct materials, direct labour, and variable manufacturing overhead. anet Dunn, the general manager of the Westwood Plant, wants to get things under control. She needs information about the operations in June since the income statement signalled that the problem could be due to the variable cost of goods sold. Dunn learns he following about operations and costs in June: a. 31,100 kilograms of materials were purchased at a cost of $3.90 per kilogram. . 24,600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) C. 11,600 direct labour-hours were worked at a cost of $8 per hour. 1. Variable manufacturing overhead cost totalling $17,600 for the month was incurred. A total of 4,400 machine-hours was recorded. t is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: . Compute the following variances for June: . Direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for infavourable, and "None" for no effect (i.e., zero variance).)

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The standard cost for one pool is as follows: Standard Quantity or Hours Standard Cost $5.60 1.40 kilograms 0.90 hours 0.30 machine-hours Direct materials Direct labour Variable manufacturing overhead Total standard cost Sales (15,200 pools) Less: Variable expenses: Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses: Manufacturing overhead Selling and administrative The plant has been experiencing problems for some time, as is shown by its June income statement when it made and sold 15,200 pools; the normal volume is 15,350 pools per month. Fixed costs are allocated using machine-hours. Total fixed expenses Net income Flexible Budgeted $ 456,000 190,000 20,300 210,300 245,700 Standard Price or Rate $4.00 per kilogram $7.00 per hour $2.00 per machine-hour 132,000 85,120 217,120 $ 28,580 Material price variance Material quantity variance Actual $ 456,000 205,690 20,300 225,990 230,010 132,000 85,120 217,120 $ 12,890 6.30 0.60 $12.50 Contains direct materials, direct labour, and variable manufacturing overhead. anet Dunn, the general manager of the Westwood Plant, wants to get things under control. She needs information about the operations in June since the income statement signalled that the problem could be due to the variable cost of goods sold. Dunn learns he following about operations and costs in June: a. 31,100 kilograms of materials were purchased at a cost of $3.90 per kilogram. . 24,600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) C. 11,600 direct labour-hours were worked at a cost of $8 per hour. 1. Variable manufacturing overhead cost totalling $17,600 for the month was incurred. A total of 4,400 machine-hours was recorded. t is the company's policy to close all variances to cost of goods sold on a monthly basis. Required: . Compute the following variances for June: . Direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for infavourable, and "None" for no effect (i.e., zero variance).)

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 9P: Grand Canyon Manufacturing Inc. produces and sells a product with a price of 100 per unit. The...
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Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The standard cost for one pool is as follows: Standard Quantity or Hours 1.40 kilograms Standard Cost $5.60 0.90 hours 0.30 machine-hours Direct materials Direct labour Variable manufacturing overhead Total standard cost Sales (15,200 pools) Less: Variable expenses: Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses: Manufacturing overhead Selling and administrative The plant has been experiencing problems for some time, as is shown by its June income statement when it made and sold 15,200 pools; the normal volume is 15,350 pools per month. Fixed costs are allocated using machine-hours. Total fixed expenses Net income Material price variance Material quantity variance Labour rate variance Labour efficiency variance Variable overhead spending variance Variable overhead efficiency variance *Contains direct materials, direct labour, and variable manufacturing overhead. Janet Dunn, the general manager of the Westwood Plant, wants to get things under control. She needs information about the operations in June since the income statement signalled that the problem could be due to the variable cost of goods sold. Dunn learns the following about operations and costs in June: a. 31,100 kilograms of materials were purchased at a cost of $3.90 per kilogram. b. 24,600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) c. 11,600 direct labour-hours were worked at a cost of $8 per hour. d. Variable manufacturing overhead cost totalling $17,600 for the month was incurred. A total of 4,400 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: Net variance Flexible Budgeted $ 456,000 190,000 20,300 a. Direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) This will cause the Cost of Goods Sold to 210,300 245,700 132,000 85,120 217,120 $28,580 b. Direct labour rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) ? Materials price variance Standard Price or Rate $4.00 per kilogram $7.00 per hour $2.00 per machine-hour ?Materials quantity variance Actual $ 456,000 c. Variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) ? Labour rate variance ? Variable overhead efficiency variance ?Variable overhead spending variance 205,690 20,300 225,990 230,010 132,000 85, 120 217,120 $ 12,890 2-a. Summarize the variances you computed in part (1) by showing the net overall favourable or unfavourable variance for the month. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) ? Labour efficiency variance 2-b. What impact did this figure have on the company's income statement? Fixed overhead budget variance Fixed overhead volume variance 6.30 0.60 $12.50 3. Pick out the two most significant variances you computed in part (1). (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) thereby net income by that amount. 4. Compute the fixed overhead cost variances. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 5. This part of the question is not part of your Connect assignment.
Transcribed Image Text:Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The standard cost for one pool is as follows: Standard Quantity or Hours 1.40 kilograms Standard Cost $5.60 0.90 hours 0.30 machine-hours Direct materials Direct labour Variable manufacturing overhead Total standard cost Sales (15,200 pools) Less: Variable expenses: Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Less: Fixed expenses: Manufacturing overhead Selling and administrative The plant has been experiencing problems for some time, as is shown by its June income statement when it made and sold 15,200 pools; the normal volume is 15,350 pools per month. Fixed costs are allocated using machine-hours. Total fixed expenses Net income Material price variance Material quantity variance Labour rate variance Labour efficiency variance Variable overhead spending variance Variable overhead efficiency variance *Contains direct materials, direct labour, and variable manufacturing overhead. Janet Dunn, the general manager of the Westwood Plant, wants to get things under control. She needs information about the operations in June since the income statement signalled that the problem could be due to the variable cost of goods sold. Dunn learns the following about operations and costs in June: a. 31,100 kilograms of materials were purchased at a cost of $3.90 per kilogram. b. 24,600 kilograms of materials were used in production. (Finished goods and work-in-process inventories are insignificant and can be ignored.) c. 11,600 direct labour-hours were worked at a cost of $8 per hour. d. Variable manufacturing overhead cost totalling $17,600 for the month was incurred. A total of 4,400 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: Net variance Flexible Budgeted $ 456,000 190,000 20,300 a. Direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) This will cause the Cost of Goods Sold to 210,300 245,700 132,000 85,120 217,120 $28,580 b. Direct labour rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) ? Materials price variance Standard Price or Rate $4.00 per kilogram $7.00 per hour $2.00 per machine-hour ?Materials quantity variance Actual $ 456,000 c. Variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) ? Labour rate variance ? Variable overhead efficiency variance ?Variable overhead spending variance 205,690 20,300 225,990 230,010 132,000 85, 120 217,120 $ 12,890 2-a. Summarize the variances you computed in part (1) by showing the net overall favourable or unfavourable variance for the month. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) ? Labour efficiency variance 2-b. What impact did this figure have on the company's income statement? Fixed overhead budget variance Fixed overhead volume variance 6.30 0.60 $12.50 3. Pick out the two most significant variances you computed in part (1). (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) thereby net income by that amount. 4. Compute the fixed overhead cost variances. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 5. This part of the question is not part of your Connect assignment.
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