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 3,500 helmets, using 2,135 kilograms of plastic. The plastic cost the company $16,226. According to the standard cost card, each helmet should require 0.51 kilograms of plastic, at a cost of $8.00 per kilogram. Required 1. According to the standards, what cost for plastic should have been incurred to make 3,500 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 Standard cost per kilogram Total standard cost Actual cost incurred Total standard cost Total material variance-unfavorable alowed 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 by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Materials price Materials quantity variance variance

Explanation / Answer

1)

2) Material price variance = (8*2135-16226) = 854 Favorable

Material quantity variance = (1785-2135)*8 = 2800 Unfavorable

Number of helmet prepared 3500 Standard kilogram per helmet 0.51 Standard quantity allowed 1785 Rate per kg 8 Standard cost 14280 Actual cost 16226 Standard cost 14280 Total material variance 1946 Unfavorable

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