Variance analysis for ABC. Starport manufactures and launches space stations. The stations are custom-made according to specifications furnished by the ordering party.

Starport has adopted an ABC system and has defined activity areas as follows: design, prototyping, testing, fabrication, launching, and assembly. In what follows, we focus on the launching activity area.

Starport launches space station components into orbit from a base located on a remote island in the Pacific Ocean. Components are assembled in orbit according to the custom designs. Starport sells unused capacity in its launch facilities to launch other companies’ products into orbit and beyond. The launching activity area has both variable and fixed costs. You are presented with the following data for the year ended December 31,2007:

Actual Budget Launches Launch hours Variable launch activity area costs (millions)

Fixed launch activity area costs (millions)

321 Required 1. Complete the numbers in the following table. The calculations will assist you in answering requirement 2.

2. Prepare an analysis of Starport’s 2007 launching activity area costs. ^VARIANCES^ND 3. Analyze your results. Provide explanations for the variances you calculate.

ABC Variance Analysis for Starport, Calculation of Key Information Actual Flexible-Budget Results Amount 1. Output units (launches) 265 2. Launch-hours 5,300 3. Launch-hours per launch ?
4. Variable launch-activity costs $ 445,200,000 5. Variable launch-activity costs per launch-hour ?
6. Variable launch-activity costs per launch ?
7. Fixed launch-activity costs $1,971,600,000 8. Fixed launch-activity costs per launch-hour ?
9. Fixed launch-activity costs per launch ?