Using Control Limits to Determine When to Investigate a Variance Kavallia Company set a standard cost for one item at $328,000; allowable deviation is !$14,500. Actual costs for the past six months are as follows:
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 4 percent of the standard amount or $14,500. Now which months should be investigated?