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Budget Variances, Materials and Labour Mahn Corporation produces high-quality leather belts. The company uses a standard costing system and has set the following standards
Budget Variances, Materials and Labour Mahn Corporation produces high-quality leather belts. The company uses a standard costing system and has set the following standards for materials and labour: Leather (2 strips @ $4.00) Direct labour (0.5 hr. @ $13.00) Total prime cost $8.00 6.50 $14.50 During the first month of the year, Mahn produced 50,000 belts. Actual leather purchased was 100,000 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 38,000 hours at $13.00 per hour. Required: 1. Compute the costs of leather and direct labour that should be incurred for the production of 50,000 leather belts. Materials Labour 2. Compute the total budget variances for materials and labour. Total Budget Variance x x Materials $ Labour 3. Conceptual Connection: Would you consider these variances material with a need for investigation? Explain.
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