Goltra Clothiers manufactures women's business suits. The company uses a standard cost accounting system. In March 2010, 11,800 suits were made. The following standard and actual cost data applied to the month of March when normal capacity was 15,000 direct labor hours. All materials purchased were used in production.

Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were \(\$ 94,500\), and budgeted variable overhead costs were \(\$ 45,000\).
Instructions:

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

(b) Compute the total overhead variance.

(c) Which of the materials and labor variances should be investigated if management considers a variance of more than \(5 \%\) from standard to be significant? Discuss the potential causes of this variance.

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Cost Element Direct materials Direct labor Overhead Standard (per unit) 5 yards at $6.80 per yard 1.0 hours at $11.50 per hour 1.0 hours at $9.30 per hour (fixed $6.30; variable $3.00) Actual $410,400 for 57,000 yards ($7.20 per yard) $125,440 for 11,200 hours ($11.20 per hour) $90,000 fixed overhead $37,000 variable overhead