Business, 11.11.2019 23:31 alexchou773pejk7x

The director of cost management for odessa company uses a statistical control chart to management determine when to investigate variances. the critical value is 1 standard deviation. the company incurred the following direct-labor efficiency variances during the first six months of the current year.

january $ 500 f
february 1,600 u
march 1,400 u
april 1,800 u
may 2,100 u
june 2,400 u
the standard direct-labor cost during each of these months was $38,000. the controller has estimated that the firm’s monthly direct-labor variances have a standard deviation of $1,900.

required:
a. determine the cutoff value for investigation if the controller’s rule of thumb is to investigate all variances equal to or greater than 6 percent of standard cost.

b. based on the cutoff value, which of the month(s) will have their direct-labor efficiency variance investigated?

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