Cinturon Corporation produces highquality leather belts. The company's plant in Boise uses a standard costing system and has set the following standards for materials and labor:
Leather strips @ $ $
Direct labor hr @ $
Total prime cost $
During the first month of the year, the Boise plant produced belts. Actual leather purchased was strips at $ per strip. There were no beginning or ending inventories of leather. Actual direct labor was hours at $ per hour.
Required:
Compute the costs of leather and direct labor that should be incurred for the production of leather belts.
Materials $fill in the blank
Labor $fill in the blank
Compute the total budget variances for materials and labor.
Total Budget Variance
Materials $fill in the blank
Favorable
Labor $fill in the blank
Unfavorable
Conceptual Connection: Would you consider these variances material with a need for investigation?
Yes
