Action Company's standard cost is $600,000.The allowable deviation is ±10%.Its actual costs for three months are as follows: $$\begin{array} { l l }
\text { April } & \$ 520,000 \
\text { May } & \$ 550,000 \
\text { June } & \$ 575,000
\end{array}$$ What are the upper and lower control limits,respectively?
A) $660,000 and $600,000
B) $660,000 and $540,000
C) $640,000 and $500,000
D) $575,000 and $520,000

Question

Action Company's standard cost is $600,000.The allowable deviation is ±10%.Its actual costs for three months are as follows: $$\begin{array} { l l } 
\text { April } & \$ 520,000 \
\text { May } & \$ 550,000 \
\text { June } & \$ 575,000
\end{array}$$ What are the upper and lower control limits,respectively?
A) $660,000 and $600,000
B) $660,000 and $540,000
C) $640,000 and $500,000
D) $575,000 and $520,000

Quizplus · Accepted Answer

The upper control limit is $600,000 + 10% of $600,000 = $660,000, and the lower control limit is $600,000 - 10% of $600,000 = $540,000.

Action Company's Standard Cost Is $600,000 April $520,000 May $550,000 June $575,000\begin{array} { l l } \text { April } & \$ 520,000 \\\text { May } & \$ 550,000 \\\text { June } & \$ 575,000\end{array} April May June ​$520,000$550,000$575,000​

Action Company's Standard Cost Is $600,000 $\begin{array} { l l } \text { April } & \$ 520,000 \\\text { May } & \$ 550,000 \\\text { June } & \$ 575,000\end{array}$