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Using Control Limits to Determine When to Investigate a Variance Kavallia Company set a standard cost for one item at $328,000; allowable deviation is $
Using Control Limits to Determine When to Investigate a Variance Kavallia Company set a standard cost for one item at $328,000; allowable deviation is $ $14,500. Actual costs for the past six months are as follows: June $330,500 September $314,000 July 343,000 October 331,000 August 346,400 November 323,000 Required: 1. Calculate the variance from standard for each month. Variance June July $ August September $ October $ November Which months should be investigated? June July August September October November 2. What if the company uses a two-part rule for investigating variances? The allowable deviation is the lesser of 4 percent of the standard amount or $14,500. Now which months should be investigated? June July August September October November
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