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Kemp Tables, Inc. (KTI) makes picnic tables of 2 4 planks of treated pine. It sells the tables to large retail discount stores such as Walmart. After reviewing the following data generated by KTIs chief accountant, the company president, Arianne Darwin, expressed concern that the total manufacturing cost was more than $1.2 million above budget ($7,136,000 $5,921,300 = $1,214,700).

	Actual Results				Master Budget
Cost of planks per table	$	46.20			$	37.80
Cost of labor per table		30.00				26.10
Total variable manufacturing cost per table (a)	$	76.20			$	63.90
Total number of tables produced (b)		80,000				77,000
Total variable manufacturing cost (a b)	$	6,096,000			$	4,920,300
Total fixed manufacturing cost		1,040,000				1,001,000
Total manufacturing cost	$	7,136,000			$	5,921,300

Ms. Darwin asked Conrad Pearson, KTIs chief accountant, to explain what caused the increase in cost. Mr. Pearson responded that things were not as bad as they seemed. He noted that part of the cost variance resulted from making and selling more tables than had been expected. Making more tables naturally causes the cost of materials and labor to be higher. He explained that the flexible budget cost variance was less than $1.2 million. Specifically, he provided the following comparison.

	Actual Results				Flexible Budget
Cost of planks per table	$	46.20			$	37.80
Cost of labor per table		30.00				26.10
Total variable manufacturing cost per table (a)	$	76.20			$	63.90
Total number of tables produced (b)		80,000				80,000
Total variable manufacturing cost (a b)	$	6,096,000			$	5,112,000
Total fixed manufacturing cost		1,040,000				1,001,000
Total manufacturing cost	$	7,136,000			$	6,113,000

Based on this information, he argued that the relevant variance for performance evaluation was only $1,023,000 ($7,136,000 $6,113,000). Ms. Darwin responded, Only $1,023,000! I consider that a very significant number. By the end of the day, I want a full explanation as to what is causing our costs to increase.

Required

1. a-1. Based on the following information, determine the total materials cost variance and the price and usage variances. Assuming that the variances are an appropriate indicator of cause.

2. 	Actual Data					Standard Data
   Number of planks per table			22					21
   Price per plank		$	2.10				$	1.80
   Material cost per table		$	46.20				$	37.80

3. a-2. Based on the following information, determine the total labor cost variance and the price and usage variances. Assuming that the variances are an appropriate indicator of cause.

4. 	Actual Data					Standard Data
   Number of hours per table			2.5					3.0
   Price per hour		$	12.00				$	8.70
   Labor cost per table		$	30.00				$	26.10

5. a-3. Determine the amount of the fixed cost spending and volume variances.

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