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 3,900 helmets, using 3,042 kilograms of plastic. The plastic cost the company $23,119.

According to the standard cost card, each helmet should require 0.69 kilograms of plastic, at a cost of $8.00 per kilogram.

Required:

1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,900 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,900 helmets?

3. What is the materials spending variance?

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

(For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Answer 1

Answer:

No. of helmets =                                3900

Standard Kg of plastic per helmet =   0.69 Kg

1.Standard Qunatity = 3900 X 0.69 Kg = 2691Kg

Standard Cost per Kg = $8.00 per Kg

2.Standard Cost = 2691Kg X $8.00 per Kg   = $21528

Actual Quantity = 3042Kg

Actual Cost = $23119

Actual Cost per Kg = 23119 / 3042   = $7.60 per Kg

3.Material Spending Variance = (Standard Quantity - Actual Qunatity ) X Standard Price

                                                    = (2691 -   3042) X 8

                                                    = 2808 U

1. Material Price Variance = (Standard Price – Actual Price) X Actual Qunatity

= 1216.80 F

Material Quantity Variance = (Standard Quantity - Actual Qunatity ) X Standard Price

                                                    = (2691 -   3042) X 8

= 2808 U