At the start of the year, Frigicor estimated that the company would produce 960 refrigeration units during the year (80 per month). Annual fixed overhead costs were estimated to be $1,200,000 ($100,000 per month), and estimated variable overhead costs were estimated to be $1,000 per unit. Standard cost per unit was set at $5,200:
Standard material cost ...........................$ 700
Standard labor cost ...............................1,000
Standard overhead rate per unit ................3,500
Total ...........................................$5,200
During the year, the company experienced stiff competition and ended up producing and selling only 800 units. Actual annual production costs were $4,511,900, and standard cost variances were as follows:

Required
Suppose you are the CFO of Frigicor, and you want to determine the cause of significant variances. Given the demands on your time, you don't want to investigate variances that have an obvious explanation or that are less than 1/2 percent of actual production cost. Which variance(s) would you investigate? Explain the basis for your answer.

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Summary of Production Varlances $ 8,900 unfavorable 34,000 unfavorable (4,600) favorable 9,600 unfavorable 4,000 unfavorable 300,000 unfavorable Material price variance Material quantity variance Labor rate variance Labor efficiency variance Controllable overhead variance Overhead volume variance Total $351,900 unfavorable