20. Caballero Corporation produces high-quality leather saddles. The company has

Question

20. Caballero Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labor:

Leather (20 strips @ $15) 300

Direct Labor (15 hours @ $15) 225

Total prime cost 525

During the year Caballero produced 150 saddles. Actual leather purchased was 3,100 strips, at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 2,500 hours at $16 per hour.

a. $9,000 F and $1,200 U

b. $9,300 F and $1,500 U

c. $9,300 U and $1,500 F

d. $9,000 U and $1,200 F

Explanation / Answer

MPV = (AP - SP)AQ = ($12 - $15)3,100 = $9,300 F

MUV = (AQ - SQ)SP = (3,100 - 3,000)$15 = $1,500 U

Compute the materials price variance and the materials usage variance, respectively.


a.
$9,000 F and $1,200 U


b.
$9,300 F and $1,500 U


c.
$9,300 U and $1,500 F


d.
$9,000 U and $1,200 F

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