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.

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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.
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