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 @ $3.00) $15.00 Direct labor (0.25 hr. @ $15.00) 3.75 Total prime cost $18.75 During the first month of the year, the Boise plant produced 44,000 belts. Actual leather purchased was 100,000 strips at $3.20 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 33,000 hours at $13.50 per hour.

Required: 1. Compute the costs of leather and direct labor that should be incurred for the production of 44,000 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

Labor $fill in the blank 5

3. Conceptual Connection: Would you consider these variances material with a need for investigation?