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) Direct labor (0.75 hr. @ $8.00) Total prime cost During the first month of the year, the Boise plant produced 32,000 belts. Actual leather purchased was 100,000 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 33,000 hours at $12.50 per hour Required 1. Compute the costs of leather and direct labor that should be incurred for the production of 32,000 leather belts Materials Labor 15.00 6.00 $21.00 2. Compute the total budget variances for materials and labor Total Budget Variance Favorable Materials Unfavorable Labor