Students are to use the MS Excel Worksheet related to
Coachbuildersâ€™ 65 Seat Bus project and calculate and review ALL
of the following Standard Cost variances:
Direct Material Variances (These can be calculated for EACH line item [ROW] AND â€œSummedâ€ [down the column] for each product):
Direct Material Price Variance (DMPV)
Direct Material Quantity Variance (DMQV)
Total Direct Material Variance (Sum the above two variances and check if it equals total difference between the budgeted/standard cost and actual cost â€“ it should!)
Direct Labour Variances (These can be calculated for EACH line item [ROW] AND â€œSummedâ€ [down the column] for each product):
Â Direct Labour Rate Variance (DLRV)
Â Direct Labour Efficiency Variance (DLEV)
Total Direct Labour Variance (Sum the above two variances and check if it equals total difference between the budgeted/standard cost and actual cost â€“ it should!)
Â Standard Variable Spending Variance (SVOHD Spending Variance)
Â Standard Variable Efficiency Variance (SVOHD Efficiency Variance)
Â Standard Fixed Spending Variance (SFOHD Spending Variance)
Â Standard Fixed Overhead Production-Volume Variance (SFOHD Volume Variance)
PLUS: Over [or Under] applied Fixed Overhead
Refer to the text Chapters 11 and 12 for the formulas required!
Students should comment briefly (500-700 word report) on the overall cost and business outcome of Coachbuildersâ€™ 65 Seat Bus project based on the standard cost variances calculated. Please DO NOT simply re-write the actual numbers in your summary, these can be seen by the tutors in your Excel workbook when they review your submission! Rather, comment on the size and type of variances and whether you believe Coachbuilders are managing costs well or not. Were there any great results or â€˜EXCEPTIONSâ€™ that you believe should be investigated further?
Is there anything else? A brief explanation to be written and submitted on the topic given below.
Why do you think standard costing is the most widely used costing system in the world in manufacturing firms, even though more sophisticated systems might be available? Discuss. (One or two paragraphs should be sufficient.)
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