Exerclse 10-1Direct Materials Varlances LO10-1 Bandar Industries Berhad of Malay

Question

Exerclse 10-1Direct Materials Varlances LO10-1 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. the company manufactured 3,500 helmets, using 2.100 kilograms of plastic. The plastic cost the company $13,880. During the quarter ending June 30, According to the standard cost card., each helmet should require 0.52 kilograms of plastio, at a cost $7.00 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 allowed Standard cost per kilogram Total standard cost Actual cost incurred Total standard cost Total material variance-unfavourable S 2. Break down the difference computed in (1) above into a materia's price variance and a materials quantity variance. (Round your actual materials price to two decimal places, and round your f answers to the nearest whole dollar, Indicate the effect of each variance by selecting "Fl for avorable, "U for unfavorable, and "Nonel for no effeat fie zero variance).) nal Materials price variance Materials quantty variance 0 Type here to search ] @ e

Explanation / Answer

According to standard calculate material cost ;

Breaking down :

Material price variance = (Standard price-actual price)Actual hours

                                = (7*2100-13860)

Material price variance = 840 F

Material quantity variance = (Standard quantity-actual quantity)standard price

                                     = (3500*.52-2100)7

Material quantity variance = 1960 U

No of helmets 3500 Standard kilograms of plastic per helmet 0.52 Total standard kilograms 1820 Total cost per kilograms 7 Total standard cost 12740 Actual cost incurred 13860 Standard cost 12740 Total material variance-Unfavourable 1120

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