Question

Materials Variances Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a standard...

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) $12.00
Direct labor (0.75 hr. @ $12) 9.00
Total prime cost $21.00

During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 299,500 strips at $3.30 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 80,100 hours at $13.00 per hour.

Required:

1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. Enter favorable values as negative numbers and unfavorable values as positive numbers.

Price variance $ Favorable
Usage variance $ Unfavorable
Total variance $ Favorable
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