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Miller Toy Company manufactures a plastic swimming pool at itsWestwood Plant. The plant has been experiencing problems as shownby its June contribution format income statement below:

	Budgeted		Actual
Sales (5,000 pools)	$	235,000	$	235,000
Variable expenses:
Variable cost of goods sold*		71,350		86,370
Variable selling expenses		13,000		13,000
Total variable expenses		84,350		99,370
Contribution margin		150,650		135,630
Fixed expenses:
Manufacturing overhead		62,000		62,000
Selling and administrative		77,000		77,000
Total fixed expenses		139,000		139,000
Net operating income (loss)	$	11,650	$	(3,370)

*Contains direct materials, direct labor, and variablemanufacturing overhead.

Janet Dunn, who has just been appointed general manager of theWestwood Plant, has been given instructions to “get things undercontrol.” Upon reviewing the plant’s income statement, Ms. Dunn hasconcluded that the major problem lies in the variable cost of goodssold. She has been provided with the following standard cost perswimming pool:

	Standard Quantity or Hours	Standard Price or Rate		Standard Cost
Direct materials	3.8 pounds	$	2.20 per pound	$	8.36
Direct labor	0.7 hours	$	6.80 per hour		4.76
Variable manufacturing overhead	0.5 hours*	$	2.30 per hour		1.15
Total standard cost				$	14.27

*Based on machine-hours.

During June the plant produced5,000 pools and incurred the following costs:

a.	Purchased 24,000 pounds of materials at a cost of $2.65 perpound.
b.	Used 18,800 pounds of materials in production. (Finished goodsand work in process inventories are insignificant and can beignored.)
c.	Worked 4,100 direct labor-hours at a cost of $6.50 perhour.
d.	Incurred variable manufacturing overhead cost totaling $7,560for the month. A total of 2,800 machine-hours was recorded.

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

Required:

1.	Compute the following variances for June:

a.	Materials price and quantity variances. (Indicate theeffect of each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zerovariance).)
b.	Labor rate and efficiency variances. (Indicate theeffect of each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zerovariance).)
c.	Variable overhead rate and efficiency variances. (Do notround your intermediate calculations. Indicate the effect of eachvariance by selecting "F" for favorable, "U" for unfavorable, and"None" for no effect (i.e., zero variance).)
2.	Summarize the variances that you computed in (1) above byshowing the net overall favorable or unfavorable variance for themonth. (Input all values as positive amounts. Indicate theeffect of each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zerovariance).)
3.	Pick out the two most significant variances that you computed in(1) above. (You may select more than one answer. Singleclick the box with a check mark for correct answers and doubleclick to empty the box for the wrong answers.)