Question
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
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:
Line Item Description | Cost |
---|---|
Leather (3 strips @ $6) | $18.00 |
Direct labor (0.75 hr. @ $16) | 12.00 |
Total prime cost | $30.00 |
During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $5.40 per strip. There was no beginning or ending inventories of leather. Actual direct labor was 78,200 hours at $16.50 per hour.
Required:
Download Excel spreadsheet
1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches.
Line Item Description | Amount | Effect |
---|---|---|
Price variance | $fill in the blank 1 | FavorableUnfavorableFavorable |
Usage variance | $fill in the blank 3 | FavorableUnfavorableUnfavorable |
Total variance | $fill in the blank 5 | FavorableUnfavorableFavorable |
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