Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are
The upper and lower control limits are, respectively,
A) $250,000 and $225,000
B) $305,000 and $195,000
C) $275,000 and $250,000
D) $275,000 and $225,000

Question

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are 
 The upper and lower control limits are, respectively,
A) $250,000 and $225,000 
B) $305,000 and $195,000 
C) $275,000 and $250,000 
D) $275,000 and $225,000

Quizplus · Accepted Answer

The upper control limit is $275,000 [$250,000 + ($250,000 × 10%)].
The lower control limit is $225,000 [$250,000 - ($250,000 × 10%)].

Highland Company's Standard Cost Is $250,000