Budgeted Actual Sales (6,000 pools) $273,000 $273,000

Variable expenses:
Variable cost of goods sold* 83,460 102,050
Variable selling expenses 24,000 24,000
Total variable expenses 107,460 126,050
Contribution margin 165,540 146,950

Fixed expenses:
Manufacturing overhead 65,000 65,000
Selling and administrative 90,000 90,000
Total fixed expenses 155,000 155,000
Net operating income (loss) $10,540 $(8,050)

Janet Dunn, who has just been appointed a 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 4.0 pounds $2.60 per pound $10.40
Direct labor 0.3 hours $8.10 per hour 2.43
Variable manufacturing overhead 0.3 hours* $3.60 per hour 1.08
Total standard cost $13.91

Based on machine-hours.

During June, the plant produced 6,000 pools and incurred the following costs:

a. Purchased 29,000 pounds of materials at a cost of $3.05 per pound.
b. Used 23,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
c. Worked 2,400 direct labor-hours at a cost of $7.80 per hour.
d. Incurred variable manufacturing overhead cost totaling $8,400 for the month. A total of 2,100 machine-hours was recorded.

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.