Figure 10-3Bortello Corporation produces high-quality leather boots. The company has a standard cost system and has set the following standards for materials and labor:
During the year Bortello produced 125 boots. Actual leather purchased was 1,700 strips, at $16 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 1,500 hours at $15 per hour.
-Refer to Figure 10-3. Compute the total budget variances for materials and labor, respectively.
A) $2,800 F and $7,500 F
B) $2,800 F and $7,500 U
C) $2,800 U and $7,500 U
D) $2,800 U and $7,500 F

Question

Figure 10-3Bortello Corporation produces high-quality leather boots. The company has a standard cost system and has set the following standards for materials and labor:
  During the year Bortello produced 125 boots. Actual leather purchased was 1,700 strips, at $16 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 1,500 hours at $15 per hour.
-Refer to Figure 10-3. Compute the total budget variances for materials and labor, respectively.
A) $2,800 F and $7,500 F 
B) $2,800 F and $7,500 U 
C) $2,800 U and $7,500 U 
D) $2,800 U and $7,500 F

Quizplus · Accepted Answer

Without access to Figure 10-3, I cannot provide specific calculations. However, the correct answer typically involves calculating the difference between the actual costs and the budgeted costs for materials and labor. A favorable (F) variance means actual costs were lower than budgeted, while an unfavorable (U) variance means actual costs were higher than budgeted.

Figure 10-3Bortello Corporation Produces High-Quality Leather Boots