In December, Koala Camp Gear Company produced 2,000 Tree Line tents and incurred the following actual Decision costs for direct material and direct labor: MEL g Purchased 25,000 sq. meters of tent fabric at $8.25 per sq. meter.

Used 24,500 sq. meters at $8.25 per sq. meter.

Used 4,200 hours of direct labor at $16.75 per hour.

The standard costs for tent production were the same in December as those given earlier in the chapter for June.

a. Compute Koala’s direct-material and direct-labor variances for December using the format shown in Exhibits 16-1 and 16-2.

b. Suppose that Koala’s management uses a statistical control chart to plot cost variances and help management decide which variances to investigate. Let's assume that the cost-management team has estimated that all of Koala’s variances exhibit a normal probability distribution with a mean of zero and a standard deviation of $4,800. The critical value is 1 standard deviation. Which of Koala’s December cost variances would you investigate? Explain.