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 2,736 kilograms of plastic. The plastic cost the company $20,794. According to the standard cost card, each helmet should require 0.63 kilograms of plastic, at a cost of $8.00 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,800 helmets? 2. What is the standard materials cost allowed (SQ SP) to make 3,800 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 (.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) Standard quantity of kilograms allowed Standard cost allowed for actual output Materials spending variance Materials price variance Materials quantity variance

Answer 1

Ans. 1	Number of helmets	3800
	Standard kilograms of plastic per helmet	$0.63
	Total standard kilograms allowed	2394
	*Total standard kilograms allowed   =   Number of helmets * Standard kilograms of plastic per helmet.
Ans. 2	Total standard kilograms allowed	2394
	Standard cost per kilogram	$8
	Total standard cost	$19,152
	*Total standard cost allowed = Total standard kilograms allowed * Standard cost per kilogram
Ans. 3	Total standard cost	$19,152
	Actual cost incurred	$20,794
	Materials spending variance - Unfavorable	$1,642
	*Materials spending variance = Actual cost incurred - Total standard cost
	*The variance is unfavorable because the actual cost incurred is higher than the budgeted / standard cost.
Ans. 4	Materials price variance = (Standard price * Actual quantity) - Actual materials purchased cost
		($8 * 2,736) - $20,794
		$21,888 - $20,794
		$1,094	favorable
	Materials quantity variance = (Standard quantity - Actual quantity) * Standard price
		(2,394 - 2,736) * $8
		-342* $8
		-$2,736	or   $2,736 unfavorable