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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: Line Item Description Cost Leather (3 strips @ $6) $18.00 Direct labor (0.75 hr. @ $16) 12.00 Total prime cost $30.00 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 78,700 hours at $16.50 per hour. Required: 1. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches. Effect Line Item Description Amount Rate variance Efficiency variance Total variance $fill in the blank 1 FavorableUnfavorableUnfavorable $fill in the blank 3 FavorableUnfavorableUnfavorable $fill in the blank 5 FavorableUnfavorableUnfavorable

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: Line Item Description Cost Leather (3 strips @ $6) $18.00 Direct labor (0.75 hr. @ $16) 12.00 Total prime cost $30.00 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 78,700 hours at $16.50 per hour. Required: 1. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches. Effect Line Item Description Amount Rate variance Efficiency variance Total variance $fill in the blank 1 FavorableUnfavorableUnfavorable $fill in the blank 3 FavorableUnfavorableUnfavorable $fill in the blank 5 FavorableUnfavorableUnfavorable

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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: Line Item Description Cost Leather (3 strips @ $6) $18.00 Direct labor (0.75 hr. @ $16) 12.00 Total prime cost $30.00 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 78,700 hours at $16.50 per hour. Required: 1. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches. Line Item Description Effect Amount Rate variance Efficiency variance Total variance $fill in the blank 1 FavorableUnfavorableUnfavorable $fill in the blank 3 FavorableUnfavorableUnfavorable $fill in the blank 5 FavorableUnfavorableUnfavorable
Transcribed Image Text: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: Line Item Description Cost Leather (3 strips @ $6) $18.00 Direct labor (0.75 hr. @ $16) 12.00 Total prime cost $30.00 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 78,700 hours at $16.50 per hour. Required: 1. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches. Line Item Description Effect Amount Rate variance Efficiency variance Total variance $fill in the blank 1 FavorableUnfavorableUnfavorable $fill in the blank 3 FavorableUnfavorableUnfavorable $fill in the blank 5 FavorableUnfavorableUnfavorable
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