Many of the 2,000 employees of the plant live within 20KM of the plant, in the towns surrounding the plant. The staff relations committee has asked the board of the company, if the company could provide a bus service from the surrounding towns to the plant during the working day. Explain how you would use standard costing to plan and control the activities of the proposed bus service

Your answer must focus on the cost control aspects of the service rather than the logistics of providing a rural bus service. Aspects that must be considered are:

(1)Why use standard costs to control the costs of the bus service

(2)The process of standard setting

(3)The type of standards to be set and what each type of standard might be used for

(4)The preparation of a standard cost specification sheet

(5)Comparing the standard to the actual results

(6)Calculating and analyzing the variances

(7)Reporting to measure effectiveness

(8)Implementing control measures and the feedback loop

Each of the above elements must be considered in the context of providing a rural bus service, with your comments and conclusions enlightened by as many relevant examples as possible.