The management of Golding Company has determined that the cost to investigate a variance produced by its standard cost system ranges from $2,000 to $3,000. If a problem is discovered, the average benefit from taking corrective action usually outweighs the cost of investigation. Past experience from the investigation of variances has revealed that corrective action is rarely needed for deviations within 8% of the standard cost. Golding produces a single product, which has the following standards for materials and labor:

Direct materials (8 lbs. @ $0.25)	$2
Direct labor (0.4 hr. @ $7.50)	3

Actual production for the past three months with the associated actual usage and costs for materials and labor follow. There were no beginning or ending raw materials inventories.

		April	May	June
Production (units)		90,000	100,000	110,000
Direct materials:
	Cost	$189,000	$218,000	$230,000
	Usage (lbs.)	723,000	870,000	885,000
Direct labor:
	Cost	$270,000	$323,000	$360,000
	Usage (hrs.)	36,000	44,000	46,000

1. What upper and lower control limits would you use for materials variances? For labor variances? May Materials April Price standard Materials Upper Control Limit Price standard Lower Control Limit Upper Control Limit Lower Control Limit Quantity standard Quantity standard Upper Control Limit Upper Control Limit Lower Control Limit Lower Control Limit b Labor Price standard Price standard Upper Control Limit Upper Control Limit S Lower Control Limit Lower Control Limit Efficiency standard Efficiency standard Upper Control Limit Upper Control Limit Lower Control Limit Lower Control Limit June Materials Price standard Upper Control Limit $ Lower Control Limit Quantity standard Upper Control Limit Lower Control Limit Labor Price standard Upper Control Limit Lower Control Limit Efficiency standard Upper Control Limit Lower Control Limit