Determine which Variances to Investigate: The manager of the sport shoe manufacturing division of Kansas City Products received the following report of variances in the manufacturing operation for the past month:

Kansas City Products conducted a statistical evaluation of its costs and variances and determined that all variances which exceeded 5 percent of actual cost or $5,000 (whichever is less) should be investigated.

Required: For each of the costs listed in the variance report, indicate which costs would be investigated under the company's rule. Also indicate why the cost should be investigated.

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Item Actual Cost Variance Direct materials: Top fabric $211,500 $14,029 F Soles 141,620 6,315 U Packing 37,980 1,855 U Conversion costs: Labor 65,119 2,107 F Machine rental 218,732 18 U Property taxes 17,143 12 F Insurance 10,422 279 U Power utilities 18,309 1,153 U Maintenance 31,596 1,478 F