Compute the total budget variances for materials and labor

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Reference no: EM13939170

BUDGET VARIANCES, MATERIALS AND LABOR

Bolsa Corporation produces high-quality leather belts. The company uses a standard cost 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 year, Bolsa produced 40,000 belts. Actual leather purchased was 122,000 strips at $3.96 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 31,200 hours at $12.50 per hour.

Required:

1. Compute the costs of leather and direct labor that should be incurred for the pro- duction of 40,000 leather belts.

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

Reference no: EM13939170

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