Zinkyl Corporation produces high-quality leather boots. The company has a standard cost system and has set the following standards for materials and labor:Leather (10 strips @ $20)$200Direct labor (10 hours @ $10)$100Total prime cost$300During the year, Zinkyl produced 100 boots. Actual leather purchased was 1,500 strips, at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 1,000 hours at $10 per hour.Compute the materials price variance.a.$12,000 Fb.$6,000 Fc.$7,300 Ud.$16,800 U

The material price variance arises due to the difference in standard price and actual price on the…

Answered: Zinkyl Corporation produces…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Zinkyl Corporation produces high-quality leather boots. The company has a standard cost system and has set the following standards for materials and labor:

Leather (10 strips @ $20) $200

Direct labor (10 hours @ $10) $100

Total prime cost $300

During the year, Zinkyl produced 100 boots. Actual leather purchased was 1,500 strips, at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 1,000 hours at $10 per hour.

Compute the materials price variance.

a.$12,000 F

b.$6,000 F

c.$7,300 U

d.$16,800 U

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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