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: June July August Required: June July August September October $331,500 November 345,000 346,400 1. Calculate the variance from standard for each month. Variance $ $ September $ October November $314,000 Which months should be investigated? 331,000 324,000

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: Required: 1. Caiculate the variance from standard for each month. Which months should be investigated? 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