Cintron Company produces high-quality leather belts. The Boise plant uses a stan

Question

Cintron Company produces high-quality leather belts. The Boise plant uses a standard costing system with the following standards for materials (leather strips) and direct labor.

There are no beginning or ending inventories for direct materials.

For direct materials, what is the price variance?

Standard Prices      Price per Leather Strip (Direct Materials) $ 5.98      Price per Labor Hour $ 10.11 July Data Number of Belts Produced 36,173 Number of Leather Strips Purchased 110,829 Number of Labor Hours Used 18,901 Actual Price per Leather Strip $ 5.91 Actual Price per Labor Hour $ 13.16 Standard Quantity of Materials Allowed (given production) 95,557     Standard Quantity of Labor Allowed (given production) 27,783

Explanation / Answer

Direct Material Price Variance = (Standard Rate - Actual Rate) x Actual Quantity Purchased                                                              = ( 5.98 - 5.91) x 110829                                                              = 7758.03 Fav

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