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:

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 273,500 strips at $3.30 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,700 hours at $12.50 per hour.

Required:

1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. Enter favorable values as negative numbers and unfavorable values as positive numbers.

Price variance	$	Favorable
Usage variance	$	Favorable
Total variance	$	Favorable