Question

Please answer the incorrect part.

Materials Vallances 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 305,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 79,500 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 $122,200 X Usage variance $ 69,475 X Total variance $ 25,800 X Favorable Unfavorable Favorable

Answer 1

Variance Analysis Data Standard Price Standard Quantity for Actual Output Standard Quantity (92000*3) Actual Output Actual Quantity Purchased Actual Quanity Used Actual Price of Material 4 per Strip 3 Strips SQ 276000 Strips 92000 Units AQP 305500 Strips AQ 305500 Strips 3.60 per Strip SP AP Material Variance Price Variance (AP-SP))* AQ purchased Usage Variance (SQ-AQ)*SP-(305500-276000)*4 Total Variance (3.60*305500)-(4*276000) Favorable (3.60-4)*305500 -122200 Unfavorable Favorable 118000 -4200