Labor Variances 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) 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 $4.50 per strip. There were no beginning or ending inventories of lesther. Actuel direct labor wes 80.200 hours at $15.00 per hour. 12.00 9.00 1. Break down the total varience for labor into a rate veriance and an efficiency variance using the columnar and formula approaches Rate variance Efficiancy variance Total variance 2. CONCERTUAL CONNECTION As part ofthe investigation ofthe unfavorable variances, the plant manger interviews the production manager. The production manager complain strongly about the quality of the leather strips. He indicates that the strips are of lower quality than u ual and that workers have to be more careful to avoid-belt nith cracks and more time is required. Also, even with extra care, many belts have to be discarded and new ones produced to replace the rejects. This replecement work has also produced some overtime demands. What corrective action should the plant maneger teke? . Return to suppliers that provide the quality corresponding to the price standard. 2. Employ more skilled labor at a cost lesser than the savings made by buying cheep material and improve the product quality 3. Thare is no nasd to change anything. The sales are not affected by this low quality of raw material. Check My Work Previous Next 0% Save and Ext Submit Assignment for Grading