Materials Variances Cinturon Corporation produces high-quality leather belts. The company's plant in Bolse uses a standard costing system and has set the following standards for 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 302,500 strips at $3.00 per strip. There were no beginn at $14.00 per hour, Required: 1. Break down the total variance for materials into a price variance and a usage vanance using the columnar and formula approaches. Enter favorable values as Price variance Usage variance 5 Total variance 2. CONCEPTUAL CONNECTION Suppose the Bolse plant manager investigates the material variances and is told by the purchasing manager that cheaper seu the favorable materials price variance. Quite pleased the purchasing manager suggests that the materials price standard be updated to reflect this new less materials price standard as suggested? Why or why not? 1. No The suggestion of the purchasing manageripremature. A favorable material occan produce an effect on both materials usage and labor 2 Ver the purchasing manager is correct. This will prove the overal profitability of the company Ne The suggestion of the purchasing manager is correct. The main are avail and to changes to the price starcard should not be made y plant in Boise uses a standard costing system and has set the following standards for materials and labor: Sets. Actual leather purchased was 302,500 strips at 53.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 79.700 hours and a usage variance using the columnar and formula approaches. Enter favorable values as negative numbers and unfavorable values as positive numbers. Jestigates the materias variances and is told by the purchasing manager that a cheaper source of leather strips had been discovered and that this is the reason for manager suggest that the materials price standard be updated to reflect this new. less expensive source of the stripe Should the int manager update the A favorablement price can produce an effect on both rates usage and labor variancel buerbinty of the company. heterot vailable and so changes to the one standard should not be made