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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

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 @ $6.00) $18.00
Direct labor (0.75 hr. @ $9.00) 6.75
Total prime cost $24.75

During the first month of the year, the Boise plant produced 45,000 belts. Actual leather purchased was 140,000 strips at $3.00 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 36,000 hours at $16.50 per hour.

Required:

1. Compute the costs of leather and direct labor that should be incurred for the production of 45,000 leather belts.

Line Item Description Amount
Cost of materials $fill in the blank
Cost of direct labor $fill in the blank

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

Line Item Description Amount Effect
Materials $fill in the blank Favorable
Labor $fill in the blank Unfavorable

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