Bi-land Company's standard cost is $150,000. The allowable deviation is ±10%. The actual costs for six months are as follows:
$$\begin{array} { l r }
\text { January } & \$ 135,000 \
\text { February } & 120,000 \
\text { March } & 145,000 \
\text { April } & 165,000 \
\text { May } & 170,000 \
\text { June } & 180,000
\end{array}$$
-Refer to the Figure.What is the variance that is higher than the upper control limit?
A)$135,000
B)$145,000
C)$150,000
D)$170,000

Question

Bi-land Company's standard cost is $150,000. The allowable deviation is ±10%. The actual costs for six months are as follows:
 $$\begin{array} { l r } 
\text { January } & \$ 135,000 \
\text { February } & 120,000 \
\text { March } & 145,000 \
\text { April } & 165,000 \
\text { May } & 170,000 \
\text { June } & 180,000
\end{array}$$
-Refer to the Figure.What is the variance that is higher than the upper control limit?
A)$135,000
B)$145,000
C)$150,000
D)$170,000

Quizplus · Accepted Answer

The upper control limit is $150,000 + 10% of $150,000 = $150,000 + $15,000 = $165,000. The only variance higher than this upper control limit is $170,000 in May.

Bi-Land Company's Standard Cost Is $150,000 -Refer to the Figure