Novall Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2003, 11,300 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours.

Overhead is applied on the basis of direct labor hours in normal capacity, budgeted fixed overhead costs were \($49,000\), and budgeted variable overhead was $35,000.

Instructions

(a) Compute the total, price, and quantity variances for (1) materials and (2) labor, and the total, controllable, and volume variances for manufacturing overhead.

(b) Which of the materials and labor variances should be investigated if management considers a variance of more than 7% from standard to be significant?

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Cost Element Direct materials Direct labor Overhead Standard (per unit) 8 yards at $4.50 per yard 1.2 hours at $13.00 per hour 1.2 hours at $6.00 per hour (fixed $3.50; variable $2.50) Actual $375,150 for 91.500 vards ($4.10 per yard) $204,450 for 14,500 hours ($14.10 per hour) $49,000 fixed overhead $36,000 variable overhead