Exercise 101 Direct Materials Variances L0101 Bandar Industr

Exercise 10-1 Direct Materials Variances [L010-1] Bandar Industries Berhad North American market, using 2,160 kilograms of plastic. The plastic cost the company $14.256. of Malaysia manufactures sporting equipment. One of the company\'s products, a football helmet for the requires a special plastic. During the quarter ending June 30, the company manufactured 3,600 helmets, According to the standard cost card, each helmet should require 0.55 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? (For requirements 3 and 4, indicate the effect of each variance by selecting \"P for favorable, \"U\" for unfavorable, and \'None\" for no effect (i.e., zero varlance). Input all amounts as positive values. Do not round intermediate calculations.) 1 Standard quantity of kilograms allowed for actual output 2 Standard cost alliowed 3 Materiale spending variance Materials quantity variance

Solution

Answer 1.

Standard Quantity of kilograms allowed = Number of helmets * Standard kilograms of plastic per helmet
Standard Quantity of kilograms allowed = 3,600 * 0.55
Standard Quantity of kilograms allowed = 1,980

Answer 2.

Standard Materials cost allowed = Standard Quantity of kilograms allowed * Standard cost per kilogram
Standard Materials cost allowed = 1,980 * $7.00
Standard Materials cost allowed = $13,860

Answer 3.

Materials Spending Variance = Actual Cost incurred - Standard Materials cost allowed
Materials Spending Variance = $14,256 - $13,860
Materials Spending Variance = $396 Unfavorable

Answer 4.

Materials Price Variance = Actual Cost incurred - Actual quantity of kilograms * Standard cost per kilogram
Materials Price Variance = $14,256 - 2,160 * $7.00
Materials Price Variance = $864 Favorable

Materials Quantity Variance = Standard cost per kilogram * (Actual quantity of kilograms - Standard quantity of kilograms)
Materials Quantity Variance = $7.00 * (2,160 - 1,980)
Materials Quantity Variance = $1,260 Unfavorable