1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. Price variance $fill in the blank 1 Favorable Usage variance $fill in the blank 3 Unfavorable Total variance $fill in the blank 5 Favorable
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a standard costing system and has set the following standards for materials and labor:
| Leather (3 strips @ $4) | $12.00 |
| Direct labor (0.75 hr. @ $12) | 9.00 |
| Total prime cost | $21.00 |
During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,200 hours at $12.50 per hour.
Required:
1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches.
| Price variance | $fill in the blank 1 | Favorable |
| Usage variance | $fill in the blank 3 | Unfavorable |
| Total variance | $fill in the blank 5 | Favorable |
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