Refer to the information for Cinturon Corporation below.
Cinturon 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 (3 strips @ $4) ..............$12.00
Direct labor (0.75 hr. @ $12) .........9.00
Total prime cost ......................$21.00
Required:
1. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches
2. As part of the investigation of the unfavorable variances, the plant manager interviews the production manager. 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 more careful to avoid 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 over-time demands. What corrective action should the plant manager take?