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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 Budget Actual Sales (3,000 pools) Variable expenses: $175,000 $175,000 Variable cost of goods sold* 24,300 58,310 10,000 68,310 140,700 106,690 10,000 34,300 Variable selling expenses Total variable expenses Contribution margin Fixed expenses: Manufacturing overhead 50,000 50,000 65,000 115,000 115,000 $25,700 (8,310) Selling and administrative 65,000 Total fixed expenses Net operating income (loss) *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 or Hours 3.0 pounds Standard Price Standard or Rate Cost Direct materials Direct labor Variable manufacturing overhead Total standard cost per unit $2.00 per pound$6.00 1.80 0.30 $ 8.10 0.3 hours $ 6.00 per hour $1.50 per hour 0.2 hours*

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