Hart applies management by exception by investigating direct materials variances of more than 5% of actual direct materials costs. Which direct materials variances will Hart investigate further?

The Direct material Price Variance must be investigate as it is unfavorable.

Explanation:

The Direct material Price Variance is computed as:

Actual Cost

= Actual Quantity * Actual Price

= 22,060 * $12.40

= $273,544

= Actual Quantity * Selling Price

= 22,060 * $12.30

= $271,338

Direct material Price Variance = $271,338 - $273,544

= - $2,206 (unfavorable)

The Direct Material Quantity Variance is computed:

Standard Cost = Standard Quantity * Standard Price

= 24,480 * $12.30

= $301,104

Direct Material Quantity Variance = $301,104 - $271,338

= $29,766 (Favorable)