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 3,200 helmets, using 2,112 kilograms of plastic. The plastic cost the company $18,163. According to the standard cost card, each helmet should require 0.61 kilograms of plastic, at a cost of $9.00 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,200 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 3,200 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.)

1. Standard Qualiity of Kilograms allowed 2. Standard Cost allowed for actual output 3. Materials spending variance - F None or U

4. Materials pirce variance - F None or U 5. Materials quantity variance - F None or U

Answer 1

1). Standard Quantity of kilograms of plastic that is allowed to make 3200 helmets:
= 3200 helmets * 0.61 kilograms = 1952 kilogram of plastic

2).Standard material cost allowed to make 3200 helmets = 1952*9 = $17568

3).Material cost variance = Std. cost - Actual cost = 17568-18163 = 595 U

4). Material price variance = (Std.price - Actual price)*Actual Qty = (Std price*Actual Qty - Actual Cost =
$9.0 * 2112 - 17163 = 19008 - 18163 = 845 F

Material Qty Variance = (Std qty -Actual Qty)*Std Price
                                   = (1952 - 2112)* 9 = 1440 U