Zapato Corporation produces leather boots. The company uses a standard cost system and has set the following standards for materials and labor (for one pair of boofs):

During the year, Zapato produced 2,000 pairs of leather boots. The actual leather purchased was 6,200 strips at $9.96 per strip. There were no beginning or ending inventories of leather.
Actual direct labor was 4,200 hours @ $12.50.
Required:
1. Compute the costs of leather and direct labor that should have been incurred for the production of 2,000 pairs of boots.
2. Compute the total budget variances for materials and labor.
3. Break down the total variance for materials into a price variance and a usage variance.
Prepare the journal entries associated with these variances.
4. Break down the total variance for labor into a rate variance and art efficiency variance.
Prepare the journal entries associated with these variances.

Transcribed Image Text:

Leather (3 strips @ $10) $30 Direct labor (2 hrs. @ $12) 24 Total prime cost $54