Plots of Sample Ranges Indicate That the Most Recent Value

question 21

Multiple Choice

Plots of sample ranges indicate that the most recent value is below the lower control limit. What course of action would you recommend?

• A) Since there is no obvious pattern in the measurements, variability is in control.
• B) One value outside the control limits is insufficient to warrant any action.
• C) Lower than expected dispersion is a desirable condition; there is no reason to investigate.
• D) The process is out of control; reject the last units produced.
• E) Variation is not in control; investigate what created this condition.

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Definitions:

Variable Costing

An accounting method that only allocates variable costs to production, treating fixed costs as period costs that are charged to expense as they are incurred.

Fixed Overhead Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, and must be paid regardless of the business activity level.

Product Costs

Costs that are directly associated with the production of goods or services.

Margin of Safety

Margin of Safety represents the difference between actual sales and break-even sales, indicating the amount by which sales can decrease before a business incurs a loss.