Action Company
Action Company's standard cost is $600,000. The allowable deviation is ±10%. Its actual costs for three months are as follows: $$\begin{array} { l l }
\text { April } & \$ 520,000 \
\text { May } & \$ 550,000 \
\text { June } & \$ 575,000
\end{array}$$
-Refer to Action Company. What are the upper and lower control limits, respectively?
A) $575,000 and $520,000
B) $640,000 and $500,000
C) $660,000 and $540,000
D) $660,000 and $600,000

Question

Action Company
Action Company's standard cost is $600,000. The allowable deviation is ±10%. Its actual costs for three months are as follows: $$\begin{array} { l l } 
\text { April } & \$ 520,000 \
\text { May } & \$ 550,000 \
\text { June } & \$ 575,000
\end{array}$$
-Refer to Action Company. What are the upper and lower control limits, respectively?
A) $575,000 and $520,000
B) $640,000 and $500,000
C) $660,000 and $540,000
D) $660,000 and $600,000

Quizplus · Accepted Answer

The upper control limit is the standard cost plus the allowable deviation, which is $600,000 + (0.10 x $600,000) = $660,000. The lower control limit is the standard cost minus the allowable deviation, which is $600,000 - (0.10 x $600,000) = $540,000.

Action Company Action Company's Standard Cost Is $600,000 April $520,000 May $550,000 June $575,000\begin{array} { l l } \text { April } & \$ 520,000 \\\text { May } & \$ 550,000 \\\text { June } & \$ 575,000\end{array} April May June ​$520,000$550,000$575,000​

Action Company
Action Company's Standard Cost Is $600,000 $\begin{array} { l l } \text { April } & \$ 520,000 \\\text { May } & \$ 550,000 \\\text { June } & \$ 575,000\end{array}$