If a Sample of Items Is Taken and the Mean

question 40

Multiple Choice

If a sample of items is taken and the mean of the sample is outside the control limits, the process is:

• A) likely out of control and the cause should be investigated.
• B) in control, but not capable of producing within the established control limits.
• C) within the established control limits with only natural causes of variation.
• D) monitored closely to see if the next sample mean will also fall outside the control limits.
• E) producing high quality products.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the amount of overhead allocated to production, based on standard rates.

Variable Overhead Efficiency Variance

A metric that shows the difference between the actual variable overhead costs incurred and the standard variable overhead costs expected for the achieved level of activity.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead costs incurred and the expected costs based on efficient use of resources.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated for the actual production level, often driven by efficiency in using the variable overhead resources.