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 4,000 helmets, using 2,960 kilograms of plastic. The plastic cost the company $19,536. 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 4,000 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 4,000 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
	4,000*.68
	2720	answer
2)	Standard material cost allowed
	SQ*SP
	2720*7
	19040
3)	Materials spending variance
	Actual cost - standard cost allowed
	19,536-19040
	496	U
4)	Material price variance
	(Actual price - standard price)*actual qty
	19536    - 7*2960
	1184	F
	Material Quantity variance
	(Actual qty - standard qty )*standard price
	(2960 -2720)*7
	1680	U