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 th North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,500 helmets using 2,310 kilograms of plastic. The plastic cost the company $15,246 According to the standard cost card, each helmet should require 0.58 kilograms of plastic, at a cost of $700 per kilogram. Required 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,500 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 3,500 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, ndicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations) Standard quantity of kilograms allowed 2. Standard cost allowed for actual output 3. Materials spending variance 4. Materials price variance Materials quantity variance

Explanation / Answer

Q1. Std qty allowed per unit of output: 0.58 unit Actual output: 3500 helmets Std Quantity allowed for actual output: (3500*0.58): 2030 kgs req 2: Std quantity allowed: 2030 kg Std price per kg: $ 7 Std material cost for actual output (2030*7): $ 14210 Req 3: Material spending variance: Std material cost for actual output 14210 Less: Actual material cost incurred 15246 Material spending variance: 1036 Unfavorable Req 4: Actual Qty used: 2310 kgs Actual Price per kg (15246/2310): $ 6.60 per kg Material Price variance: Actual Qty (Std price-Actual price) 2310 (7.00 - 6.60) = $ 924 Favorable Material Quantity variance = Std price (Std qty-Actual Qty) 7.00 (2030-2310) = $ 1960 Unfavorable

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