Bandar Industries Berhad of Malaysia manufactures sporting e

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 3,900 helmets, using 2,613 kilograms of plastic. The plastic cost the company $19,859.

According to the standard cost card, each helmet should require 0.61 kilograms of plastic, at a cost of $8.00 per kilogram.

Required:

1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,900 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,900 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 \"F\" for favorable, \"U\" for unfavorable, and \"None\" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Solution

Answer 1.

Standard Quantity allowed = Standard Quantity allowed per helmet * Number of helmet produced
Standard Quantity allowed = 0.61 * 3,900
Standard Quantity allowed = 2,379 kilograms

Answer 2.

Standard Materials Cost allowed = Standard Quantity allowed * Standard Cost per kilogram
Standard Materials Cost allowed = 2,379 * $8.00
Standard Materials Cost allowed = $19,032

Answer 3.

Materials Spending Variance = Actual Materials Cost - Standard Materials Cost allowed
Materials Spending Variance = $19,859 - $19,032
Materials Spending Variance = $827 Unfavorable

Answer 4.

Materials Price Variance = Actual Materials Cost - Actual Quantity * Standard Cost per kilogram
Materials Price Variance = $19,859 - 2,613 * $8.00
Materials Price Variance = $1,045 Favorable

Material Quantity Variance = Actual Quantity * Standard Cost per kilogram - Standard Materials Cost allowed
Material Quantity Variance = 2,613 * $8.00 - $19,032
Material Quantity Variance = $1,872 Unfavorable