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 3,000 helmets, using 2,100 kilograms of plastic. The plastic cost the company $15,960. According to the standard cost card, each helmet should require 0.6 kilograms of plastic, at a cost of $8 per kilogram Required: 1. According to the standards, what cost for plastic should have been incurred to make 3,000 helmets? How much greater or less is this than the cost that was incurred? (Round "standard kilograms of plastic per helmet" to 1 decimal place.) Number of helmets Standard kilograms of plastic per helmet Total standard kilograms allowed Standard cost per kilogram Total standard cost Actual cost incurred Total standard cost Total material variance 2. Break down the difference computed in (1) above into a materials price variance and a materials quantity variance. (Round your actual materials price to two decimal places, and round your final answers to the nearest whole dollar. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e. zero variance).) Materials price variance Materials quantity variance

Answer 1

.Requirement 1

Number of Helmets	3000
Standard KG of plastic per helmet	0.6
Total standard KG allowed	1800
Standard cost per KG	$ 8.00
Total standard cost	$ 14,400.00
Actual cost incurred	$ 15,960.00
Total standard cost	$ 14,400.00
Total material variance	$   1,560.00

Requirement 2

Material Price variance	$ 840.00	Favourable
Material Quantity variance	$2400	Unfavourable

Working

Standard DATA for		3000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 0.6 Kilograms x 3000 Units)=1800 Kilograms	$     8.00	$       14,400.00

Actual DATA for		3000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	2100	$      7.60	$      15,960.00

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$            8.00	-	$            7.60	)	x	2100
	840
	Variance		$       840.00			Favourable-F

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	X	Standard Rate
(	1800	-	2100	)	X	$       8.00
	-2400
	Variance		$   2,400.00			Unfavourable-U