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2.- Budget Variances, Materials and Labor Cinturon Corporation produces high-quality leather belts. The company's plant...

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Accounting

2.-

Budget Variances, Materials and Labor

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 (5 strips @ $5.00) $25.00
Direct labor (0.5 hr. @ $8.00) 4.00
Total prime cost $29.00

During the first month of the year, the Boise plant produced 46,000 belts. Actual leather purchased was 130,000 strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 34,000 hours at $9.00 per hour.

Required:

1. Compute the costs of leather and direct labor that should be incurred for the production of 46,000 leather belts.

Materials $fill in the blank 1
Labor $fill in the blank 2

2. Compute the total budget variances for materials and labor.

Total Budget Variance
Materials $fill in the blank 3
FavorableUnfavorable
Labor $fill in the blank 5
FavorableUnfavorable

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