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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: Flexible Actual Budget Sales (8,000 pools) Variable expenses: $240,000 240,00e Variable cost of goods sold* Variable selling expenses Total variable expenses Contribution margin Fixed expenses: 94,000 112,470 10,000 104,000 122,470 136,000117,530 10,000 Manufacturing overhead 55,000 55,000 70,000 125,000 125,000 Selling and administrative 70,000 Total fixed expenses Net operating income (loss) $ 11,000 $(7,470) Contains direct materials, direct labor, and variable manufacturing overheac 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 Standard Price or Rate Standard Cost Hours Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit .5 pounds 0.4 hours 0.2 hours 2.50 per pound $ 8.75 2.60 0.40 $ 11.75 $6.50 per hour 2.00 per hour Based on machine-hours

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