The following depicts a 6-month schedule for a project. After 3 months on the job (July 1), the contractor concluded that 20 percent of Activity F (Activities A, B, and D are completed) was completed, 80 percent of Activity C was completed, and 40 percent of Activity E was completed. The project has cost the contractor a total of $535. For this project, using earned value concepts, determine the schedule variance and the cost variance. State if the project is over or under budget and if it is ahead or behind schedule.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The following depicts a 6-month schedule for a project.
After 3 months on the job (July 1), the contractor concluded that 20 percent of Activity F (Activities A, B, and D are completed) was completed, 80 percent of Activity C was completed, and 40 percent of Activity E was completed. The project has cost the contractor a total of $535. For this project, using earned value concepts, determine the schedule variance and the cost variance. State if the project is over or under budget and if it is ahead or behind schedule.
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