The company's policy is to investigate any variance that is greater than $1,000 or 10% of budget, whichever is larger. In other words, if 10% of the budget amount is greater than $1,000, they are to investigate any variance greater than 10%. Or, if $1,000 is greater than 10% of the budget amount, they are to investigate any variance greater than $1,000. The raw material budget amount is $100,000, so 10% of that is $10,000. $10,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $10,000. The direct labor budget amount is $50,000, so 10% of that is $5,000. $5,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $5,000. Investigating the labor variance only would not conform to this policy, because the labor variance is only $4,000.
The company's policy is to investigate any variance that is greater than $1,000 or 10% of budget, whichever is larger. In other words, if 10% of the budget amount is greater than $1,000, they are to investigate any variance greater than 10%. Or, if $1,000 is greater than 10% of the budget amount, they are to investigate any variance greater than $1,000. The raw material budget amount is $100,000, so 10% of that is $10,000. $10,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $10,000. The direct labor budget amount is $50,000, so 10% of that is $5,000. $5,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $5,000. Investigating neither variance would not conform to this policy.
The company's policy is to investigate any variance that is greater than $1,000 or 10% of budget, whichever is larger. In other words, if 10% of the budget amount is greater than $1,000, they are to investigate any variance greater than 10%. Or, if $1,000 is greater than 10% of the budget amount, they are to investigate any variance greater than $1,000. The raw material budget amount is $100,000, so 10% of that is $10,000. $10,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $10,000. The direct labor budget amount is $50,000, so 10% of that is $5,000. $5,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $5,000. Investigating both the material variance and the labor variance would not conform to this policy.
The company's policy is to investigate any variance that is greater than $1,000 or 10% of budget, whichever is larger. In other words, if 10% of the budget amount is greater than $1,000, they are to investigate any variance greater than 10%. Or, if $1,000 is greater than 10% of the budget amount, they are to investigate any variance greater than $1,000. The raw material budget amount is $100,000, so 10% of that is $10,000. $10,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $10,000. Actual raw material was $89,000, which is $11,000 less than the budgeted amount. $11,000 is greater than $10,000, so they are to investigate that variance. The direct labor budget amount is $50,000, so 10% of that is $5,000. $5,000 is greater than $1,000. Therefore, they are to investigate any variance that is greater than $5,000. Actual direct labor was $54,000, which is $4,000 greater than the budgeted amount. $4,000 is less than $5,000. Therefore, they do not need to investigate that variance. So they will investigate the raw material variance only.
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The company should investigate