ezto.mheducation.com McGraw-Hill Connect 3.00 points Bandar Industries Berhad of
ID: 2569970 • Letter: E
Question
ezto.mheducation.com McGraw-Hill Connect 3.00 points 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 35,000 helmets, using 22,500 kilograms of plastic. The plastic cost the company $171,000. According to the standard cost card, each helmet should require 0.6 kilograms of plastic, at a cost of $8 per killogram Required: 1. According to the standards, what cost for plastic should have been incurred to make 35,000 helmets? How much greater or less is this than the cost that was incurred? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Round Standard kilograms of plastic per helmet to 1 decimal place.) 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 2. Break down the difference computed in (1) above into a materials price variance and a materials quantity variance. (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 quanbity varianceExplanation / Answer
1.
Number of helmets
35,000
Standard kilogram of plastic per helmet
0.6
Total standard kilograms allowed
21,000
Standard cost per kilogram
$8
Total standard cost
$168,000
Actual cost incurred
$171,000
Total standard cost
$168,000
Total material variance
$3,000 U
2.
Actual price = $ 171,000/22,500 = $ 7.6
Material price variance = (Standard price – Actual price) x Actual quantity
= ($ 8 - $ 7.6) x 22,500 = $ 0.4 x 22,500 = $ 9,000 F
Material quantity variance = (Standard quantity – Actual quantity) x standard price
= (21,000 – 22,500) x $ 8 = - 12,000 U
Material price variance
$ 9,000
F
Material quantity variance
$ 12,000
U
Number of helmets
35,000
Standard kilogram of plastic per helmet
0.6
Total standard kilograms allowed
21,000
Standard cost per kilogram
$8
Total standard cost
$168,000
Actual cost incurred
$171,000
Total standard cost
$168,000
Total material variance
$3,000 U
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