Budget Variances, Materials and Labor1Cinturon 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 @ $6)Direct labor (0.75 hr. @ $16)Total prime cost$18.0012.00$30.00During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $5.40 per strip. There was no beginning or endinginventories of leather. Actual direct labor was 78,200 hours at $16.50 per hour.Required:1. Compute the costs of leather and direct labor that should be incurred for the production of 92,000 leather belts.Cost of materialsCost of direct labor2. Compute the total budget variances for materials and labor.Total Budget VarianceMaterialsLabor3. Conceptual Connection: Would you consider these variances material with a need for investigation?4. Refer to Exhibit 2.2 for a description of data analytic types. What data analytic type is used in Requirements 1, 2, and 3?The data analytic type for Requirement 1 isThe data analytic type that best fits Requirements 2 and 3 is

Cost of materials: 92,000 belts * (3 strips/belt) * ($5.40/strip) = $1,476,000Cost of direct labor:…

Answered: Budget Variances, Materials and Labor 1…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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