Question

Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,100 helmets, using 2,325 kilograms of plastic. The plastic cost the company $15,345.

According to the standard cost card, each helmet should require 0.68 kilograms of plastic, at a cost of $7.00 per kilogram.

Required:

1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,100 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,100 helmets?

3. What is the materials spending variance?

4. What is the materials price variance and the materials quantity variance?

Answer 1

1)	Standard quantity allowed
	Actual units produced*standard kilo of plastic per unit
	3,100*.68
	2108	answer
2)	Standard material cost allowed
	SQ*SP
	2,108*7
	14756
3)	Materials spending variance
	Actual cost - standard cost allowed
	15345-14756
	589	U
4)	Material price variance
	(Actual price - standard price)*actual qty
	15345 - 7*2325
	930	F
	Material Quantity variance
	(Actual qty - standard qty )*standard price
	(2325 - 2108)*7
	1519	U