(Solved): Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a stand ...

Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a standard costing system-and has sot the foliowing standards for materials and labor; During the first month of the year, the Boise plant produced 92,000 beits, Actual leather purchased was 287,500 strips at \( \$ 4.50 \) per strip, There were no beginning or ending inventories of leather. Actual direct labor was 79,400 hours at \( \$ 15.00 \) per hour. Requiredt 1. Break down the total variance for labor isto a rate variance and an efficiency variance using the columinar and formula approaches. 2. CONCEPTUAL. CONNECTION As part of the investigation of the unfavorable variances, the plant manager interviews the production managef, The production manager complains strongly about the quality of the leather strips. He indicates that the strips are of lower quality than usual and that workers have to be mere careful to atvoid a belt with cracks and more time is required. Also, even with extra care, many belts have to be discarded and new ones produced to replace the rejects. This replacement work has also produced some overtime demands. What corrective action should the plant manager take? 1. Return to suppliers that provide the quality corresponding to the price standard. 2. Employ more tkilied labor at a cost lesser than the savings made by buying cheap materiat and improve the product quality. 3. There is no need to change amything. The sales are not affected by this low qualify of raw material.