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 4,000 helmets, using 3,040 kilograms of plastic. The plastic cost the company $23,104 According to the standard cost card, each helmet should require 0.68 kilograms of plastic, at a cost of $8.00 per kilogram. Requirec 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 4,000 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 4,000 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.) 1. 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

Ans.1 Standard Quantity of kilograms allowed = Manufactured helmets * Required kilogram at standard level 4000 * 0.68 2720 kilograms Ans.2 Standard cost = Standard quantity * Standard price 2720 kilogram * $8 per kilogram $21760 Ans.3 Materials spending variance   = Standard cost - Actual cost 21760 - 23104 -1344 Unfavorable Ans.4a Materials price variance = (Standard price - Actual price) * Actual quantity (8 - 7.6) * 3040 1216 Favorable *Actual price = Actual cost / Actual quantity 23104 / 3040 7.6 Ans.4b Materials quantity variance = (Standard quantity - actual quantity) * Standard price (2720 - 3040) * 8 -2560 unfavorable

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