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! Required information EX 10-28 (Algo) Cost Variance Investigation (LO 10-4) The director of cost management for Odessa Company uses a statistical control chart to help 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 February $ 270 F 820 U 720 U March April May 920 U 1,070 U June 1,300 U The standard direct-labor cost during each of these months was $21,000. The controller has estimated that the firm's monthly direct-labor variances have a standard deviation of $970. EX 10-28 (Algo) Part 2: Which variances will be investigated? Required: 2-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. 2-b. Based on the cutoff value, which month will have its direct-labor efficiency variance investigated? Complete this question by entering your answers in the tabs below. Req 2A Req 2B 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. Cutoff value < Req 2A Req 2B >

! Required information EX 10-28 (Algo) Cost Variance Investigation (LO 10-4) The director of cost management for Odessa Company uses a statistical control chart to help 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 February $ 270 F 820 U 720 U March April May 920 U 1,070 U June 1,300 U The standard direct-labor cost during each of these months was $21,000. The controller has estimated that the firm's monthly direct-labor variances have a standard deviation of $970. EX 10-28 (Algo) Part 2: Which variances will be investigated? Required: 2-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. 2-b. Based on the cutoff value, which month will have its direct-labor efficiency variance investigated? Complete this question by entering your answers in the tabs below. Req 2A Req 2B 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. Cutoff value < Req 2A Req 2B >

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 12E: Using variance analysis and interpretation Last year, Endicott Corp. adopted a standard cost system....
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! Required information EX 10-28 (Algo) Cost Variance Investigation (LO 10-4) The director of cost management for Odessa Company uses a statistical control chart to help 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 February $ 270 F 820 U 720 U March April May 920 U 1,070 U June 1,300 U The standard direct-labor cost during each of these months was $21,000. The controller has estimated that the firm's monthly direct-labor variances have a standard deviation of $970. EX 10-28 (Algo) Part 2: Which variances will be investigated? Required: 2-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. 2-b. Based on the cutoff value, which month will have its direct-labor efficiency variance investigated? Complete this question by entering your answers in the tabs below. Req 2A Req 2B 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. Cutoff value < Req 2A Req 2B >
Transcribed Image Text:! Required information EX 10-28 (Algo) Cost Variance Investigation (LO 10-4) The director of cost management for Odessa Company uses a statistical control chart to help 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 February $ 270 F 820 U 720 U March April May 920 U 1,070 U June 1,300 U The standard direct-labor cost during each of these months was $21,000. The controller has estimated that the firm's monthly direct-labor variances have a standard deviation of $970. EX 10-28 (Algo) Part 2: Which variances will be investigated? Required: 2-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. 2-b. Based on the cutoff value, which month will have its direct-labor efficiency variance investigated? Complete this question by entering your answers in the tabs below. Req 2A Req 2B 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. Cutoff value < Req 2A Req 2B >
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