Compute the costs of leather and direct labor that should be incurred for the production of 46,000 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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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:

Leather (2 strips @ $5.00) $10.00
Direct labor (0.5 hr. @ $9.00) 4.50
Total prime cost $14.50

During the first month of the year, the Boise plant produced 46,000 belts. Actual leather purchased was 130,000 strips at $3.10 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 33,000 hours at $13.00 per hour.

Required:

1.  Compute the costs of leather and direct labor that should be incurred for the production of 46,000 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?
 

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