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 (7,000 pools) $310,000 $310,000
Variable expenses:
Variable cost of goods sold* 110,810 131,685
Variable selling expenses 25,000 25,000
Total variable expenses 135,810 156,685
Contribution margin 174,190 153,315
Fixed expenses:
Manufacturing overhead 66,000 66,000
Selling and administrative 91,000 91,000
Total fixed expenses 157,000 157,000
Net operating income (loss) $17,190 $(3,685)

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 or Hours Standard Price or Rate Standard Cost
Direct materials 4.1 pounds $2.70 per pound $11.07
Direct labor 0.4 hours $8.20 per hour 3.28
Variable manufacturing overhead 0.4 hours* $3.70 per hour 1.48
Total standard cost $15.83

During June the plant produced 7,000 pools and incurred the following costs:
a. Purchased 33,700 pounds of materials at a cost of $3.15 per pound.
b. Used 28,500 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
c. Worked 3,400 direct labor-hours at a cost of $7.90 per hour.
d. Incurred variable manufacturing overhead cost totaling $12,710 for the month. A total of 3,100 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 variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
d. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.