Bolsa Corporation produces high-quality leather belts. The company uses a standard cost 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
During the year, Bolsa produced 40,000 belts. Actual leather purchased was 122,000 strips at $3.96 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 31,200 hours at $12.50 per hour.

Required:
1. Compute the costs of leather and direct labor that should be incurred for the production of 40,000 leather belts.
2. Compute the total budget variances for materials and labor.