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Question - 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)$12.00Direct labor (0.75 hr. @ $12)9.00Total prime cost$21.00
During the first month of the year, Boise plant produced 92,000 belts. Actual leather purchased was 297,500 strips at $3.60 per strip.
There were no beginning or ending inventories of leather. Actual direct labor was 78,400 hours at $15.00 per hour.
Required: Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. If required, enter favorable values as negative numbers.
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