10 E Bandar Industries Berhad of Malaysia manufactures sporting equipment One of
ID: 2404405 • Letter: 1
Question
10 E 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 2,442 killograms of plastic. The plastic cost the company $18,559. According to the standard cost card, each helmet should require 0.57 kilograms of plastic, at a cost of $8.00 per kilogram. 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,700 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 3,700 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 (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) varianceExplanation / Answer
(1) Standard Quantity of Kilograms allowed :-
Actual output * Std Qty per unit
3700 helmets * 0.57 KG = 2109 KG
(2) Std cost allowed for actual output :-
2109 KG * $8 = $16872
(3) Material Spending Variance :-
Std cost – Actual cost
16872 – 18559 = 1687(U)
(4) Material Price Variance = (SR – AR) * AQ
AR = 18559/2442 = 7.60
(8 – 7.60) * 2442 = 977 (F)
Material Quantity Variance = (SQ – AQ) * SR
(2109 – 2442) * 8 = 2664 (U)
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