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:
Leather (3 strips @ $4) | $12.00 |
Direct labor (0.75 hr. @ $12) | 9.00 |
Total prime cost | $21.00 |
During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $4.20 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 79,400 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.
Rate variance | $ | Unfavorable |
Efficiency variance | $ | Unfavorable |
Total variance | $ | Unfavorable |
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