1. Budget Variances, Materials and Labour

   Mahn Corporation produces high-quality leather belts. The company uses a standard costing system and has set the following standards for materials and labour:

   Leather (5 strips @ $3.00)	$15.00
   Direct labour (0.5 hr. @ $14.00)	7.00
   Total prime cost	$22.00

   During the first month of the year, Mahn produced 37,000 belts. Actual leather purchased was 120,000 strips at $3.10 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 30,000 hours at $13.00 per hour.

   Required:

   1. Compute the costs of leather and direct labour that should be incurred for the production of 37,000 leather belts.

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

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

   	Total Budget Variance
   Materials	$fill in the blank 3
   Labour	$fill in the blank 5

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

   Explain.

   The input in the box below will not be graded, but may be reviewed and considered by your instructor.