Chapter 10, Problem 46E

Refer to the information for Cinturon Corporation on the previous page.

Required:

1. 1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches.
2. 2. CONCEPTUAL CONNECTION Suppose the Boise plant manager investigates the materials variances and is told by the purchasing manager that a cheaper source of leather strips had been discovered and that this is the reason for the favorable materials price variance. Quite pleased, the purchasing manager suggests that the materials price standard be updated to reflect this new, less expensive source of leather strips. Should the plant manager update the materials price standard as suggested? Why or why not?