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Question - Bortello Corporation produces high-quality leather boots. The company has a standard cost system and has set the following standards for materials and labor:
Leather (12 strips @ $20) $240
Direct labor (10 hours @ $12) $120
Total prime cost $360
During the year Bortello produced 125 boots. Actual leather purchased was 1,700 strips, at $16 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 1,500 hours at $15 per hour.
Required - Compute the total budget variances for materials and labor, respectively.
a. $2,800 F and $7,500 F
b. $2,800 F and $7,500 U
c. $2,800 U and $7,500 U
d. $2,800 U and $7,500 F
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