Standard costs are used to help manage and analyze a company’s cost. With a standard to which an actual cost can be compared, managers can determine if too much labor or materials were used. They can develop cost-cutting strategies to help improve the company’s bottom line. Standard costs can also be used to help ensure quality. In this assignment you will practice using standard costs to determine variance.
Ace Airways has two aircraft types: Boeing 737 and Airbus A320. The budget for the month of June included 3 maintenance checks on the B737 and 2 maintenance checks on the A320. The budgeted cost of one check on the B737 is $250,000 and $300,000 for one check on the A320.
The actual results were 2 maintenance checks on the B737 and 3 maintenance checks on the A320. The actual costs were $275,000 per check for the B737 and the costs for the A320 checks were $315,000 per check.
Prepare the following information in a document:
Compute the volume variance for the month of June.
Compute the rate variance for the month of June.
State whether each volume variance and rate variance is favorable or unfavorable.
This assignment is worth 30 points, with each item above being worth 10 points. You will receive full credit for accurate answers. You will receive a 5-point deduction for failing to show your calculations.
You should submit your assignment by the deadline using the link in the upper right. Should you calculate your answers by hand, you may wish to either scan your assignment or take a digital photo of it. Either way is fine, but please make sure your submission is legible and can be easily graded. Alternatively, you may wish to use a program such as Excel to figure your calculations. Again, make sure your answers are easily discernible in the Excel spreadsheet. Late assignments will not be accepted!
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