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 3,800 helmets using 2,242 kilograms of plastic. The plastic cost the company $14,797 According to the standard cost card, each helmet should require 0.5 kilograms of plastic, at a cost of $7 per kilogram. Required: 1. According to the standards, what cost for plastic should have been incurred to make 3,800 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

3 800 05 1.900 1 1 2 Number of helmets 3 Standard kilograms of plastic per helmet 4 Total standard kilograms allowed 5 Standard cost per kilogram 6 Total standard cost 7 Actual cost incurred 8 Total standard cost 9 Total material variance $7 $13,300 $14,797 $13,300 ($1,497) Unfavorable 11 2 Materials price variance 12 (Standard price - Actual price) Actual quantity Materials quantity variance 13 (Standard quantity - Actual quantity) Standard price $897 F ($2,394) U Calculations are shown below: A B 3800 0.5 =B2*B3 1 1 2 Number of helmets 3 Standard kilograms of plastic per helmet 4 Total standard kilograms allowed 5 Standard cost per kilogram 6 Total standard cost 7 Actual cost incurred 8 Total standard cost 9 Total material variance =B4*B5 14797 =B6 =B8-B7 Unfavorable 10 11 2 Materials price variance 12 (Standard price - Actual price) Actual quantity =(7-(14797/2242))*2242 Materials quantity variance 13 (Standard quantity - Actual quantity) Standard price =((3800*0.5)-2242)*7 M