Materials 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: During the first month of the vear, the Bolse plant produced 92,000 belts. Actual leather purchased was 285,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct laber was 78,300 hours at $16.50 per nout. Required: 1. Break down the total variance for materials into a pnce variance and a usage variance using the columnar and formula approaches. Enter favorable values as negative numbers and unfavorable values as positive numbers. 2. Conceptual Connection: Suppose the Boise plant manager investigates the matenals 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 the favorable materials price variance. Quite pleased, the purchasing manager suggests that the materiafs price standard be updated to reflect this new, less expensive source of leather strips. The plant manoger responded that more information was needed before deciding to update the price standard. What additional information would prove to be useful to the plant manager? What does this tell you about the diagnostic role of data analytics? 1. No, the suggestion of the purchasing manager is premature. A favorable materials price can produce an effect on both materials usage and labor variances. The diagnostic role of data analytics requires both subjective and objective information and interaction effects are critical. 2. Yes, the purchasing manager is correct. This will improve the overall profitability of the company. The diagnostic role of data analytics requires both subjective and objectrve information and interaction effects are not critical. 3. No, the suggestion of the purchasing manager is incorrect. The materials are not avalable and so changes to the price standard should not be made. The diagnostic role of data analytics requires both subjective and objective information and interoction effects are critical