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 3,600 helmets, using 2,340 kilograms of plastic. The plastic cost the company $15,444. According to the standard cost card, each helmet should require 0.57 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 3,600 helmets? 2. What is the standard materials cost allowed (SQ * SP) to make 3,600 helmets? 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance?

Answer 1

Standard Quantity of Kilogram Allowed = Std material require per UnitX Actual Unit Produced

=0.57 KGX 3600 Helmet=2052 KG

Std Cost allowed Alloed for Actual Output= Std quantity of KG allowed X Std cost er KG

=2052 KGX $7/KG= $14364

Material Sepnding Variance = Std Cost- Actual Cost

$14364-$15444=$1080 Unfavourable

Material Price Variance= ( Std Price-Actual price) X Actual Qty

=($7-$6.60)2340=$936 Favourable

Actual price per Kg=$15444/2340=$6.60

Material Quantity Avriance= (Std Qty-Actual Qty)X std Price

(2052 Kg- 2340 Kg)X $7= $2016 Unfavourable