2.-

Budget Variances, Materials and Labor

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 (5 strips @ $5.00)	$25.00
Direct labor (0.5 hr. @ $8.00)	4.00
Total prime cost	$29.00

During the first month of the year, the Boise plant produced 46,000 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 34,000 hours at $9.00 per hour.

Required:

1. Compute the costs of leather and direct labor that should be incurred for the production of 46,000 leather belts.

Materials	$fill in the blank 1
Labor	$fill in the blank 2

2. Compute the total budget variances for materials and labor.

	Total Budget Variance
Materials	$fill in the blank 3	FavorableUnfavorable
Labor	$fill in the blank 5	FavorableUnfavorable