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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 29
USING CONTROL LIMITS TO DETERMINE WHEN TO INVESTIGATE A VARIANCE
Sholar Company set a standard cost for one item at $230,000; allowable deviation is ±$8,000. Actual costs for the past six months are as follows:
Required:
1. Calculate the variance from standard for each month. Which months should be investigated?
2. What if the company uses a two-part rule for investigating variances? The allowable deviation is the lesser of 3 percent of the standard amount or $8,000. Now which months should be investigated?
Sholar Company set a standard cost for one item at $230,000; allowable deviation is ±$8,000. Actual costs for the past six months are as follows:
Required:
1. Calculate the variance from standard for each month. Which months should be investigated?
2. What if the company uses a two-part rule for investigating variances? The allowable deviation is the lesser of 3 percent of the standard amount or $8,000. Now which months should be investigated?
Explanation
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1.
Calculate Variance of standard and a...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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