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 2,010 kilograms of plastic. The plastic cost the company $17,286.
According to the standard cost card, each helmet should require 0.58 kilograms of plastic, at a cost of $9.00 per kilogram.
Required:
1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,000 helmets?
2. What is the standard materials cost allowed (SQ × SP) to make 3,000 helmets?
3. What is the materials spending variance?
4. What is the materials price variance and the materials quantity variance?
Standard Quantity allowed = 3,000 * 0.58 = 1740 |
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Standard materials cost = 1740 * 9 = 15,660 |
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Materials spending variance = 15,660 - 17,286 = 1626 U |
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Materials Price Variance = (SP-AP) * AQ = (9 - 17286/2010) * 2010 = 804 F Materials Quantity Variance = (SQ-AQ) * SP = (1740 - 2010) * 9 = 2430 U |
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