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 (5 strips @ $4.00) $20.00 Direct labor (1 hr. @ $9.00) 9.00 Total prime cost $29.00 During the first month of the year, the Boise plant produced 30,000 belts. Actual leather purchased was 120,000 strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 37,000 hours at $16.00 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 $fill in the blank 1 Labor $fill in the blank 2 2. Compute the total budget variances for materials and labor. Total Budget Variance Materials $fill in the blank 3 Labor $fill in the blank 5 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 (5 strips @ $4.00) $20.00 Direct labor (1 hr. @ $9.00) 9.00 Total prime cost $29.00 During the first month of the year, the Boise plant produced 30,000 belts. Actual leather purchased was 120,000 strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 37,000 hours at $16.00 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 $fill in the blank 1 Labor $fill in the blank 2 2. Compute the total budget variances for materials and labor. Total Budget Variance Materials $fill in the blank 3 Labor $fill in the blank 5 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 (5 strips @ $4.00) | $20.00 |
| Direct labor (1 hr. @ $9.00) | 9.00 |
| Total prime cost | $29.00 |
During the first month of the year, the Boise plant produced 30,000 belts. Actual leather purchased was 120,000 strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 37,000 hours at $16.00 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 | $fill in the blank 1 |
| Labor | $fill in the blank 2 |
2. Compute the total budget variances for materials and labor.
| Total |
||
| Materials | $fill in the blank 3 | |
| Labor | $fill in the blank 5 |
3. Conceptual Connection: Would you consider these variances material with a need for investigation?
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