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:

Line Item Description Cost

Leather $(3$ strips @ $$6)$ $$18\mathrm{.}00$

Direct labor $(0\mathrm{.}75$ hr$.$ @ $$16)12\mathrm{.}00$

Total prime cost $$30\mathrm{.}00$

During the first month of the year, the Boise plant produced $92,000$ belts. Actual leather purchased was $287,500$ strips at $$5\mathrm{.}40$ per strip. There was no beginning or ending inventories of leather. Actual direct labor was $78,200$ hours at $$16\mathrm{.}50$ per hour.

Required:

$1.$ Compute the costs of leather and direct labor that should be incurred for the production of $92,000$ leather belts.

Line Item Description Amount

Cost of materials $fill in the blank $1$

Cost of direct labor $fill in the blank $2$

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

Total Budget Variance

Line Item Description Amount Effect

Materials $fill in the blank $3$

Favorable

Labor $fill in the blank $5$

Unfavorable