Question
Standard costs are used to help manage and analyze a companys cost. With a standard to which an actual cost can be compared, managers can
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.
Instructions
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.
Step by Step Solution
3.47 Rating (160 Votes )
There are 3 Steps involved in it
Step: 1
1 Volume variance formula Volume variance actual units budgeted units x budgeted overhead rate For ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started