Problem 5 miller toy company manufactures a plastic swimming pool at

Uncategorized

Problem 5

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:

Budgeted Actual

Sales (15,000 pools)…………………………….. $240,000 $240,000

Less variable expenses:

Variable cost of goods sold*………………. 57,900 74,210

Variable selling expenses…………………. 18,000 18,000

Total variable expense………………………….. 75,900 92,210

Contribution margin……………………………. 164,100 147,790

Less fixed expenses:

Manufacturing overhead…………………… 66,000 66,000

Selling and administrative…………………. 84,000 84,000

Total fixed expenses…………………………… 150,000 150,000

Net operating income………………………….. $ 14,100 $(2,210)

_______ ———-

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet 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 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

Of Hours or Rate Cost

Direct materials……………… 3.4 pounds $2.00 per pound $6.80

Direct labor………………….. 0.3 hour $7.50 per pound 2.25

Variable manufacturing overhead 0.2 hour $3.00 per pound 0.60

Total standard cost…………….. $9.65

______

Based on machine-hours.

Ms. Dunn has determined that during June the plant produced 6,000 pools and incurred the following costs:

Purchased 25,400 pounds of materials at a cost of $2.45 per pound.
Used 20,200 pounds of materials in production. (finished goods and work in process inventories are insignificant and can be ignored.)
Worked 2,400 direct labor-hours at a cost of $7.20
Incurred variable manufacturing overhead cost totaling $5,100 for the month. A total of 1,500 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required

Compute the following variance for June:
Direct materials price and quantity variances.
Direct labor rate and efficiently variances
Variable overhead spending and efficiently variances
Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. What impact did this figure have on the company’s income statement? Show computations.

Continue to order Get a quote

July 1, 2023

61.When there is a shortage in a market, prices are likely to:

A. Fall because buyers do not wish to buy as much as sellers want to sell.

B. Rise because some buyers will offer to pay a higher price.

C. Fall because sellers are likely to reduce their production if prices rise.

D. Rise because the government will put a price ceiling in place.

62.If a market shortage exists:

A. The invisible hand will work to reduce the price.

B. The only solution is for the government to raise the price.

C. Producers will compete for customers by reducing prices.

D. Consumers will compete for the product by offering to pay more.

63.A market surplus occurs when:

A. People cannot buy the amount of goods and services that they are willing and able to buy.

B. The price is less than the equilibrium price.

C. The quantity supplied exceeds the quantity demanded at a given price.

D. There is a price ceiling.

64.When there is a surplus in a market, prices are likely to fall because:

A. Buyers do not wish to buy as much as sellers want to sell.

B. Some buyers will offer to pay a higher price, initiating a move up the supply curve.

C. Sellers are likely to increase their production.

D. Buyers will wait for the government to establish a price floor.

65.If a market surplus exists:

A. The only resolution is for the government to set the price.

B. Consumers will compete for the product buy offering to pay more.

C. Producers will compete for customers by reducing prices.

D. The equilibrium price is equal to the price ceiling.

66.If demand is constant, a decrease in the supply of gasoline will cause the equilibrium price:

A. To rise and quantity to fall.

B. And quantity both to rise.

C. To fall and quantity to rise.

D. And quantity both to fall.

67.If demand is constant, a leftward shift in the supply curve will result in:

A. A decrease in equilibrium quantity and a lower equilibrium price.

B. An increase in equilibrium quantity and a lower equilibrium price.

C. A decrease in equilibrium quantity and a higher equilibrium price.

D. An increase in equilibrium quantity and a higher equilibrium price.

68.The price of chocolate candy bars rises. This could be due to:

A. A decrease in the wage rate paid to workers in the candy bar factories.

B. A decrease in the cost of chocolate, which is used to produce candy bars.

C. A subsidy by the federal government for the producers of chocolate candy bars.

D. A decrease in the number of chocolate candy bar producers.

69.If demand is unchanged, a rightward shift in the supply curve for plasma TVs will cause:

A. A decrease in equilibrium quantity and a higher equilibrium price.

B. An increase in equilibrium quantity and a higher equilibrium price.

C. An increase in equilibrium quantity and a lower equilibrium price.

D. A decrease in equilibrium quantity and a lower equilibrium price.

70.Which of the following would cause a decrease in the price of automobiles?

A. A technological advance in automobile manufacturing.

B. An increase in the wages paid to automobile assembly line workers.

C. A decrease in the cost of gasoline.

D. An increase in the number of buyers.