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 @ $6.00) | $18.00 |
Direct labor (0.75 hr. @ $9.00) | 6.75 |
Total prime cost | $24.75 |
During the first month of the year, the Boise plant produced 45,000 belts. Actual leather purchased was 140,000 strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 36,000 hours at $16.50 per hour.
Required:
1. Compute the costs of leather and direct labor that should be incurred for the production of 45,000 leather belts.
Line Item Description | Amount |
---|---|
Cost of materials | $fill in the blank |
Cost of direct labor | $fill in the blank |
2. Compute the total budget variances for materials and labor.
Line Item Description | Amount | Effect |
---|---|---|
Materials | $fill in the blank | Favorable |
Labor | $fill in the blank | Unfavorable |
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