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 2,100 kilograms of plastic. The plastic cost the company 513,860 According to the standard cost card, each helmet should require 0.52 kilograms of plastic, at a cost of 57.00 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 killograms 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 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

Solution 1 No of helmets            3,500 Standard kilogram of plastic per helmet 0.52 Total Standard kilograms allowed            1,820 Standar cost per kg                    7 Total Standard Cost          12,740 Actual cost incurred          13,860 Total Material Cost variance unfavorable          (1,120) Material Variance Standard Actual per unit Actual Price              7.00              6.60 As given below Quanity              0.52              0.60 As given below Total cost    13,860.00 Total Quantity used      2,100.00 Per unit cost =13860/2100           6.60 Total Quantity used      2,100.00 Total helmets      3,500.00 Per helmet usage =2100/3500           0.60 Material Price variance = (Standard price - Actual Price) * Actual usage = (7-6.6)*2100 Favorable price variance 840 Material quanitity variance = (Standard Quantity - Actual Quantity) * Budgered Price = (1820 - 2100)*7 Unfavorable quantity variance          (1,960) Total Variance =840-1960 Total Variance          (1,120)

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