how to Calculate the upper and lower control limits for each manufacturing cost category

Direct materials:

Liquids (4.5 decilitres @ $0.40)

Bottles (I @ $0.05)

Direct labour (0.2 br. @ $15.00)

Variable overhead (0.2 hr. @ $5.00)

Fixed overhead (0.2 hr. @ $1.50)

Management has decided to investigate only those variances that exceed the lesser of 10 percent

of the standard cost for each category and $20,000.

During the past quarter, 250,000 four-decilitre bottles of cologne were produced. Descriptions

of actual activity for the quarter follow:

a. A total of 1.35 million decilitres of liquids were purchased, mixed, and processed. Evaporation

was higher than expected (no inventories of liquids are maintained). The price paid per

decilitre averaged $0.42.

b. Exactly 250,000 bottles were used. The price paid for each bottle was $0.048.

c. Direct labour hours totalled 48,250, with a total cost of $733,000.

Normal production volume for Buenolorl is 250,000 bottles per quarter. The standard over

head rates are computed by using normal volume. All overhead costs are incurred uniformly

throughout the year.