The controller for La Jolla Caterers, Inc., uses a statistical control chart to help management determine when to investigate variances. The critical value is 1 standard deviation. The company incurred the following direct-labor efficiency variances during the first six months of the current year.

JANUARY Rer.cemmansseeetee r: $250 F ENG) (llodeet actneerte. $ 900 U REDiUAIV es prensa eer 800 U NAVs ete ern aaa 1,050 U MARC Wischmanceon nse ts 700 U WIUInveNornersesoendsecopsanaaepooe 1,200 U The standard direct-labor cost during each of these months was $19,000. The controller has estimated that the firm’s monthly direct-labor variances have a standard deviation of $950.

Required

a. Draw a statistical control chart and plot the preceding variance data. Which variances should be investigated?

b. Suppose that the controller’s ruleo f thumb is to investigate all variances equal to or greater than 6 percent of standard cost. Which variances will be investigated?

c. Would you investigate any of the variances listed other than those indicated by the rules discussed in requirements

(a) and (b)? Why?