PLEASE GIVE DETAILS Labor Variances Cinturon Corporation produces high-quality l

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PLEASE GIVE DETAILS

Labor 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) Direct labor (0.75 hr$12) Total prime cost During the first month of the year, Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,200 hours at $12.50 per hour Required: Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches. Rate variance Efficiency variance Total variance $12.00 9.00 $21.00

Explanation / Answer

Rate variance 39100 Unfavorable =78200*(12.5-12) Efficiency variance 110400 Unfavorable =12*(78200-92000*0.75) Total variance 149500 Unfavorable =(78200*12.5)-(92000*9)

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