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 kilogranm. 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 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 S

Explanation / Answer

A / 1 B C D E 2 1. standard cost of plastic for making 35000 helmets 3 Particulars 4 Number of Helmets 35000 5 Standard Kgs of plastic per Helmet 0.6 6 Total Standard Kgs allowed 21000 7 standard cost per Kg of plastic $8 8 Total Standard cost $168,000 =C7*C6 9 Actual Cost incurred $171,000 10 Excess Cost incurred $3,000 11 This is unfavourable $3,000 12 13 2. computation of material price variance and quantity variance 14 Price Variance 15 Actual Quantity used 22500 16 Actual Rate per Kg $7.60 17 Standard Rate per kg $8.00 18 Price variance = $9,000.00 =C15*(C17-C16) 19 This is favourable $9,000.00 20 Quantity variance 21 Standard Qty 21000 22 Actual Qty 22500 23 Standard Rate per kg $8.00 24 Qty Variance= $12,000.00 =-(C21-C22)*C23 25 This is unfavourable $12,000 26 Therefore total variance= $3,000.00 =C25-C19 27 This is unfavourable $3,000

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