Chapter 9, Problem 4CE

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. 1. Calculate the variance from standard for each month. Which months should be investigated?
2. 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?