Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the

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 3,700 helmets, using 2,590 kilograms of plastic. The plastic cost the $19,684 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 3,700 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 byselecting "For favorable, "U" for unfavorable, and "None for no effect (i.e., zero variance).) Materials price variance Materials quantity variance

Explanation / Answer

Answer

1 )

2 )

material price variance = actual material * ( actual rate - standard rate )

= 2590 * ( 19684 / 2590 - 8 )

= 1036 favorable

material quantity variance = 8 * (2590 - 0.6 * 3700 )

= 2960 unfavorable

number of helmets 3700 standard kilograms of plastic per helmet 0.6 total standard kilogram allowed (3700 * 0.6 ) 2220 standard cost per kilogram 8 total standard cost(2220 * 8 ) 17760 actual cost incurred 19684 total standard cost 17760 total material variance - unfavorable 1924

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