Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Bolsa corporation produces high quality leather belts.
Transcribed Image Text:Question: 2.7
Bolsa 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 (4 strips @ $5.00)
$20.00
Direct labor (0.25 hr. @ $11.00) 2.75
Total prime cost
$22.75
During the first month of the year, Boise plant produced 30,000 belts. Actual leather purchased was 130,000
strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was
35,000 hours at $13.50 per hour.
Compute the costs of leather and direct labor that should be incurred for the production of 30,000 leather belts.
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