The director of cost management for Odessa Company uses a statistical control chart to help...
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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. The standard direct-labor cost during each of these months was $24,000. The controller has estimated that the firm's monthly directlabor variances have a standard deviation of $1,000. 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 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. 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. Complete this question by entering your answers in the tabs below. Based on the cutoff value, which month will have its direct-labor efficiency variance investigated
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