Investigation Variances Sommers Company Uses Following Rule Determine Whether Materials Us Q17760948

Investigation of Variances
Sommers Company uses the following rule to determine whethermaterials usage variances should be investigated: A materials usagevariance will be investigated anytime the amount exceeds the lesserof $12,000 or 10% of the standard cost. Reports for the past fiveweeks provided the following information:

Week
    MUV
Standard Materials Cost

1

$10,500 F

$120,000

2

10,700 F

100,500

3

9,000 U

120,000

4

13,500 U

127,500

5

10,500 U

103,500

Required:
Using the rule provided, identify the cases that will beinvestigated.

Week 1

Week 2

Week 3

Week 4

Week 5
choices for each week:

Will not be investigated

Will be investigated because it exceeds the 10% ruleonly

Will be investigated because it exceeds the $12,000rule only

Will be investigated because it exceeds both the 10%rule and the $12,000 rule

Will be investigated because it exceeds both the 10%rule and the $12,000 rule

 
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