In the book Advanced Managerial Accounting, Robert P. Magee discusses monitoring cost variances.
A cost variance is the difference between a budgeted cost and an actual cost. Magee considers weekly
monitoring of the cost variances of two manufacturing processes, Process A and Process B. One
individual monitors both processes and each week receives a weekly cost variance report for each
process. The individual has decided to investigate the weekly cost variance for a particular process (to
determine whether or not the process is out of control) when its weekly cost variance is too high. To
this end, a weekly cost variance will be investigated if it exceeds $2,500.
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