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 (0.75 hr. @ $10.00)	7.50
Total prime cost	$22.50

During the first month of the year, the Boise plant produced 48,000 belts. Actual leather purchased was 120,000 strips at $3.50 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 31,000 hours at $16.50 per hour.

Required:

1. Compute the costs of leather and direct labor that should be incurred for the production of 48,000 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?