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 @ $6.00) $18.00 Direct labor (0.5 hr. @ $9.00) 4.50 Total prime cost $22.50 During the first month of the year, the Boise plant produced 30,000 belts. Actual leather purchased was 110,000 strips at $3.90 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 30,000 hours at $13.50 per hour. Required: 1. Compute the costs of leather and direct labor that should be incurred for the production of 30,000 leather belts. Materials $ Labor $ 2. Compute the total budget variances for materials and labor. Total Budget Variance Materials $ Labor $ 3. Conceptual Connection: Would you consider these variances material with a need for investigation?
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 @ $6.00) $18.00 Direct labor (0.5 hr. @ $9.00) 4.50 Total prime cost $22.50 During the first month of the year, the Boise plant produced 30,000 belts. Actual leather purchased was 110,000 strips at $3.90 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 30,000 hours at $13.50 per hour. Required: 1. Compute the costs of leather and direct labor that should be incurred for the production of 30,000 leather belts. Materials $ Labor $ 2. Compute the total budget variances for materials and labor. Total Budget Variance Materials $ Labor $ 3. Conceptual Connection: Would you consider these variances material with a need for investigation?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Budget Variances, Materials and Labor
Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a
| Leather (3 strips @ $6.00) | $18.00 |
| Direct labor (0.5 hr. @ $9.00) | 4.50 |
| Total prime cost | $22.50 |
During the first month of the year, the Boise plant produced 30,000 belts. Actual leather purchased was 110,000 strips at $3.90 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 30,000 hours at $13.50 per hour.
Required:
1. Compute the costs of leather and direct labor that should be incurred for the production of 30,000 leather belts.
| Materials | $ |
| Labor | $ |
2. Compute the total budget variances for materials and labor.
| Total |
||
| Materials | $ | |
| Labor | $ |
3. Conceptual Connection: Would you consider these variances material with a need for investigation?
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