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 3,600 helmets, using 2,700 kilograms of plastic. The plastic cost the company $17,820.

According to the standard cost card, each helmet should require 0.70 kilograms of plastic, at a cost of $7.00 per kilogram.

Required:

1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,600 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,600 helmets?

3. What is the materials spending variance?

4. What is the materials price variance and the materials quantity variance?

Explanation / Answer

1)The standard quantity of kilograms of plastic (SQ) that is allowed to make 3,600 helmets = 3600*0.7 = 2,520 Kilogram.

2) The standard materials cost allowed (SQ × SP) to make 3,600 helmets = 2520*7 = $17,640.

3) The materials spending variance = 17640 - 17820 = $180 Unfavourable.

4) The materials price variance = (7-6.6)*2700 = $1,080 Favourable

The materials quantity variance = (2520-2700)*7 = $1,260 Unfavourable

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