Sometimes, the root cause of a variance requires that variance analysis be performed in both hours and
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Problem: In Table 1515, the cost and schedule variances are measured in fully burdened dollars for Cost Center 2834 only.
From Table 15-15, you are ahead of schedule and over budget. There could be several possible causes for this, including schedule compression, using higher salaried labor, overtime, additional resources, or other causes. How can we determine which of these causes is the real reason for the variances?
Table 1516 shows the variance data in both hours and dollars.
a. Calculate the cost variances in both hours and dollars. Compare the results. What are your conclusions?
b. Calculate the planned fully burdened labor rate using BCWS (or BCWP).
c. Calculate the actual fully burdened labor rate using ACWP.
d. Explain the possible reasons for the differences in labor rates and how this affects your answer to part a.
e. Table 1517 shows the departmental pay structure for Cost Center 2834. Determine the departmental overhead rate, in percent.
f. How does Table 1517 affect your answer to partd?
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Related Book For
Project Management A Systems Approach to Planning Scheduling and Controlling
ISBN: 978-0470278703
10th Edition
Authors: Harold Kerzner
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