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 3,300 helmets, using 2,442 kilograms of plastic. The plastic cost the company $18,559. 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 3,300 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 3,300 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 of kilograms of plastic (SQ) that is allowed to make 3,300 helmets

3300*0.69=

2277

Kgs.

2. Standard materials cost allowed (SQ × SP) to make 3,300 helmets

2277*8=

18216

3. Materials spending variance

Total std.cost-Total Actual cost

18216-18559=

-343

UF

Materials price variance

Std. Price/Kg.-Actual price/Kg.)*Actual Qty. used

(8-(18559/2442))*2442=

977

F

Materials quantity variance

(Std. Qty for actual prodn.-Actual Qty.)*Std. Price/Kg.

(2277-2442)*8=

-1320

UF

MPV+MQV=MSp.V

977 F+1320(UF)=343(UF)