Use the following information for exercise: Cinturon Corporation produces high-quality leather belts. The company's plant in Newcastle uses a standard costing system and has set the following standards for materials and labour: Leather (3 strips @ $4) $12.00 Direct labour (0.75 hr @ $18 13.50 Total prime cost $25.50 During the first month of the year, the Newcastle 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 labour was 78 200 hours at $18.50 per hour. BUDGET VARIANCES, MATERIALS AND LABOUR Refer to the information for Cinturon Corporation above. REQUIRED: 1 Compute the costs of leather and direct labour that should be incurred for the production of 92 000 leather belts. 2 Compute the total budget variances for materials and labour. 3 Would you consider these variances material with a need for investigation? Explain.
Use the following information for exercise: Cinturon Corporation produces high-quality leather belts. The company's plant in Newcastle uses a standard costing system and has set the following standards for materials and labour: Leather (3 strips @ $4) $12.00 Direct labour (0.75 hr @ $18 13.50 Total prime cost $25.50 During the first month of the year, the Newcastle 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 labour was 78 200 hours at $18.50 per hour. BUDGET VARIANCES, MATERIALS AND LABOUR Refer to the information for Cinturon Corporation above. REQUIRED: 1 Compute the costs of leather and direct labour that should be incurred for the production of 92 000 leather belts. 2 Compute the total budget variances for materials and labour. 3 Would you consider these variances material with a need for investigation? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
Use the following information for exercise:
Cinturon Corporation produces high-quality leather belts. The company's plant
in Newcastle uses a standard costing system and has set the following
standards for materials and labour:
Leather (3 strips @ $4)
$12.00
Direct labour (0.75 hr @ $18
13.50
Total prime cost
$25.50
During the first month of the year, the Newcastle 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 labour was 78 200
hours at $18.50 per hour.
BUDGET VARIANCES , MATERIALS AND LABOUR
Refer to the information for Cinturon Corporation above.
REQUIRED:
1 Compute the costs of leather and direct labour that should be incurred
for the production of 92 000 leather belts.
2 Compute the total budget variances for materials and labour.
3 Would you consider these variances material with a need for
investigation? Explain.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education