Exercise 8-4 Direct Materials Variances [LO8-4] Bandar Industries Berhad of Mala
ID: 2563776 • Letter: E
Question
Exercise 8-4 Direct Materials Variances [LO8-4]
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 3,600 helmets, using 2,268 kilograms of plastic. The plastic cost the company $17,237.
According to the standard cost card, each helmet should require 0.56 kilograms of plastic, at a cost of $8.00 per kilogram.
According to the standards, what cost for plastic should have been incurred to make 3,600 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.)
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).)
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 3,600 helmets, using 2,268 kilograms of plastic. The plastic cost the company $17,237.
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 $0Explanation / Answer
1.
2.
Materials price variance = (SP - AP) x AQ purchased
= [$8 - ($17237/2268)] x 2268
= $907 F
Materials quantity variance = (SQ - AQ) x SP
= (2016 - 2268) x $8
= $2016 U
Number of helmets 3600 Standard of kgs of plastic per helmet 0.56 Total standard kgs allowed 2016 Standard cost per kg $8.00 Total standard cost $16128 Actual cost incurred $17237 Total standard cost $16128 Total material variance-unfavorable $1109Related Questions
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