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 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 kilogram. 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? (Round "standard kilograms of plastic per helmet" to 1 decimal place.) Number of helmets 35,000 Standard kilograms of plastic per helmet Total standard kilograms allowed Standard cost per kilogram Total standard cost 21,000 $8 $168,000 $171,000 168,000 Actual cost incurred Total standard cost Total material variance $3,000 Unfavorable 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 quantity variance

Explanation / Answer

1. total material variance (already given in question) = $ 3000 unfavourable

2. material price variance = ( standard price - actual price ) actual quantity

= ( 8 - (171000/22500) ) * 22500

= (8-7.6) *22500

= $ 9000 favourable

material quantity variance = (standard quantity - actual quantity) * standard price

= (21000 - 22500 ) * 8

= $ 12000 unfavourable

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