Question
Material Variance if quantity of materials purchased = quantity of materials used: Zapato Corporation produces leather boots. The company uses a standard cost system and
Material Variance if quantity of materials purchased = quantity of materials used:
Zapato Corporation produces leather boots. The company uses a standard cost system and has set the following standards for materials and labor (for one pair of boots):
Leather (3 strips @ $10) $30
Direct labor (2 hrs. @ $12) $24
Total prime cost $54
During the year, Zapato produced 2,000 pairs of leather boots. The actual leather purchased was 6,200 strips at $9.96 per strip. There were no beginning or ending inventories of leather. Actual. direct labor was 4,200 hours @ $12.50. Required:
1. Break down the total variance for materials into a price variance and a usage variance. Prepare the journal entries associated with these variances.
2. Break down the total variance for labor into a rate variance and an efficiency variance. Prepare the journal entries associated with these variances
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