and prepared for the next batch of materials to be colored. The following standards for changeover for a given bateh have been established: Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable. Materials and Labor Variances At the beginning of the year, Craig Company had the following standard cost sheet for one of its plastic products: The actual results for the year are as follows: a. Units produced: 370,000 . b. Materials purchased: 2,590,000 pounds (a) $5.20. c. Materials used: 2,220,000 pounds. d. Direct labor: 814,000 hours @ \$12.48. Required: 1. Compute price and usage variances for materials. Enter amounts as positive numbers and select Favorable or Unfavorable. 2. Compute the labor rate and labor efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable Labor rate variance Cinturon 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: During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $4.50 per strip. There were no beginning or ending inventories of leather, Actual direct labor was 78,400 hours at $13.00 per hour. Required: 1. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches. 2. CONCEPTUAL CONNECTION As part of the investigation of the unfavorable variances, the plant manager interviews the production manager. The production manage complains strongly about the quality of the leather strips. He indicates that the strips are of lower quality than usual and that workers have to be more careful to avoid a belt with cracks and more time is required. Also, even with extra care, many belts have to be discarded and newhines produced to replace the rejects. This replacement work has also produced some overtime demands. What corrective action should the plant manager take? 1. Return to suppliers that provide the quality corresponding to the price standard. 2. Employ more skilled labor at a cost lesser than the savings made by buying cheap material and Improve the product quality. 3. There is no need to change anything. The sales are not affected by this low quality of raw material