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 (4 strips @ $3.00) $12.00 Direct labor (0.75 hr. @ $10.00) 7.50 Total prime cost $19.50 During the first month of the year, the Boise plant produced 40,000 belts. Actual leather purchased was 140,000 strips at $3.30 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 36,000 hours at $13.50 per hour. Required: 1. Compute the costs of leather and direct labor that should be incurred for the production of 40,000 leather belts.
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 (4 strips @ $3.00) $12.00 Direct labor (0.75 hr. @ $10.00) 7.50 Total prime cost $19.50 During the first month of the year, the Boise plant produced 40,000 belts. Actual leather purchased was 140,000 strips at $3.30 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 36,000 hours at $13.50 per hour. Required: 1. Compute the costs of leather and direct labor that should be incurred for the production of 40,000 leather belts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a
| Leather (4 strips @ $3.00) | $12.00 |
| Direct labor (0.75 hr. @ $10.00) | 7.50 |
| Total prime cost | $19.50 |
During the first month of the year, the Boise plant produced 40,000 belts. Actual leather purchased was 140,000 strips at $3.30 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 36,000 hours at $13.50 per hour.
Required:
1. Compute the costs of leather and direct labor that should be incurred for the production of 40,000 leather belts.
Transcribed Image Text:Required:
1. Compute the costs of leather and direct labor that should be incurred for the production of
40,000 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?
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