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 lower than the lower control limit?
A)$120,000
B)$145,000
C)$170,000
D)$180,000

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 lower than the lower control limit?
A)$120,000
B)$145,000
C)$170,000
D)$180,000

Quizplus · Accepted Answer

The lower control limit is calculated as $150,000 - 10\% 	imes $150,000 = $135,000. Therefore, the only variance lower than the lower control limit is $120,000 in February.

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