Out-Of Control Indicators May Include a Number of Conditions

question 3

Multiple Choice

Out-of control indicators may include a number of conditions. What is not one of these?

• A) at least 8 upward (or downward) consecutive changes
• B) at least 8 consecutive points above (or below) the centerline
• C) at least 1 point beyond two standard deviations from the centerline
• D) at least 4 of 5 consecutive points beyond one standard deviation from the centerline

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Definitions:

Predetermined Rate

A rate established in advance to apply overhead costs to products or job orders, usually based on estimated costs and activity levels.

Standard Cost Tables

Reference charts that list the predetermined costs for various products or services, facilitating cost control and budgeting.

Institute of Management Accountants

A worldwide association of accountants and financial professionals in business, focused on promoting management accounting.

Overhead Cost Variance

The difference between the actual overhead costs incurred and the standard (or expected) overhead costs for a given accounting period.