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 3,100 helmets, using 2,170 kilograms of plastic. The plastic cost the company $14,322 According to the standard cost card, each helmet should require 0.63 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 3,100 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

Explanation / Answer

Part-1 Number Of helmet 3100 Standard Kilogram of Plastic Per Helmet 0.63 Total Standard Kilogram Allowed 1953 Standard Cost per Kilogram $7.00 Total Standard Cost $13,671.00 Actual Cost Incurred $14,322.00 Total Standard Cost $13,671.00 Total Material Variance- Unfavourable -$651.00 Part-2 Material Price Variance = Actual Quantity used (Standard Rate- Actual Rate) =2170($7-($14322/2170)) =2170($7-$6.6)= $868 Favourable Material Quantity Variance = Standard Rate (Standard Quantity- Actual Quantity) =$7(1953-2170)=-$1519 Unfavourable

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