Chapter 9, Problem 9.6SE

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Question: 2.7 Bolsa 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 (4 strips @ $5.00) $20.00 Direct labor (0.25 hr. @ $11.00) 2.75 Total prime cost $22.75 During the first month of the year, Boise plant produced 30,000 belts. Actual leather purchased was 130,000 strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 35,000 hours at $13.50 per hour. Compute the costs of leather and direct labor that should be incurred for the production of 30,000 leather belts. Answer: Total standard cost of leather = $600,000 Total standard cost of direct labor = $82,500

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