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 3,800 helmets, using 2,698 kilograms of plastic. The plastic cost the company $17,807 According to the standard cost card, each helmet should require 0.61 kilograms of plastic, at a cost of $7.00 per kilogram. Required 1. According to the standards, what cost for plastic should have been incurred to make 3,800 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-unfavorable 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 variance Materials quantity variance

Explanation / Answer

Section A

Section B

Calculation of price and quantity variance

Particulars

Amt

Reference

Comments

Standard price

                  7

A

As per question

Actual price

            6.60

B

(17807/2698)-As per question

Favorable price variance per kg

            0.40

C

(A-B)

Actual Quantity

          2,698

D

As per question

Total price variance-favorable

          1,079

E

C*D

Standard quantity

          2,318

D

As per D above

Actual quantity

          2,698

E

As per question

Additional kgs used

             380

F

(E-D)

Standard price per kg

                  7

G

As per question

Total quantity variance (unfavorable)

        -2,660

H

Total net variance (unfavourable)

        -1,581

(E+H)

Particulars Amt Reference Comments Number of helmets           3,800 A As per question Standard kilograms plastic per helmet             0.61 B As per quesetion Total standard kilograms allowed           2,318 C A*B Standard cost per kilogram                   7 D As per question Total standard cost        16,226 E D*C Actual cost incurred        17,807 F As per question Total standard cost        16,226 G As per E Total material variance-unfavorable           1,581 H F-G

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