Calculator Print i Materials Variances Cinturon Corporation produces high quality leather belts. The company's plant in Boise uses a standard standards for materials and laborz Leather (3 strips o $4) Direct labor (0.75 hr.$12) Total prime cost During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual drect labor was 78,200 hours at $12.50 per hour. Required: costing system and has set the following $12.00 9.00 $21.00 1. Break down the total variance for materials into a price varlance and a usage varlance using the columnar and formula approaches. Price variance Usage variance Total variance 2. CONCEPTUAL CONNECTION Suppose the Bolse plant manager investigates the materials variances and is told by the purchasing manager that a cheaper source of leather striles had been discovered and that this is the reason for the favorable materials price variance, Quite pleased, the purchasing manager sugpests that the materials price standard be updated to reflect this new, less expensive source of leather strips. Should the plant manager update the materials price standard as supgested? Why or why not L. No, The suggestion of the purchasing manager is premature. A favorable materials price can produce an effect on both materials usage and labor variances. 2. Yes, the purchasing manager is correct. This will improve the overall profitability of the company 3. No , The sugoestion of the purchasing manager is incorrect. The matierals are not available ans so changes to the price standard should not be made Check Hy Work 3 more Check Vy Work ues remaining Previous Next