Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the
ID: 2467567 • Letter: B
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 3,900 helmets, using 2,730 kilograms of plastic. The plastic cost the company $18,018.
According to the standard cost card, each helmet should require 0.62 kilograms of plastic, at a cost of $7.00 per kilogram.
According to the standards, what cost for plastic should have been incurred to make 3,900 helmets? How much greater or less is this than the cost that was incurred? (Round Standard kilograms of plastic per helmet to 2 decimal places.)
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-unfavourable =
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 by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Materials price variance =
Materials quantity variance =
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 3,900 helmets, using 2,730 kilograms of plastic. The plastic cost the company $18,018.
Explanation / Answer
Number of helmets = 3900 helmets
Standard kilograms of plastic per helmet = 0.62 kg
Total standard kilograms allowed= 3900 * 0.62 = 2418 kg
Standard cost per kilogram= $7
Total standard cost= 2418 * 7 = $16926
Actual cost incurred= $18,018
1). cost for plastic should have been incurred to make 3,900 helmets as per standards:
Total standard cost= 2418 * 7 = $16926
Total material variance-unfavourable = Standard Cost - Actual Cost
= $16926 - $18,018
=$ 1092 (unfavourable)
Cost incurred greater by $1092.
2). materials price variance = (Standard price - Actual Price) * Actual quantity
= Standard price * Actual quantity - Actual Price * Actual quantity
= $7 *2730 - $18,018
= $1092. (favourable)
Materials quantity variance = Standard Price ( Standard quantity - Actual quantity)
= Standard Price * Standard quantity - Actual quantity * Standard Price
= $16926 - $7 *2730
= $2184 (Unfavourable)
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