Asia Sporting Industries located in Hong Kong manufactures s

Asia Sporting Industries, located in Hong Kong, manufactures sporting equipment. A major seller for the company, a football helmet for the Texas market, requires a very hard special plastic. During the quarter ending March 31, the company manufactured 3,600 helmets, using 1,980 kilograms of plastic. The plastic cost the company $13,068. Based on the company\'s standard cost card for the helmet, each helmet should require 0.5 kilograms of plastic, at a cost of $7 per kilogram. Required: 1. According to the standards, what would be the total standard cost of plastic that should have been incurred to make 3,600 helmets? How much greater or less is this than the cost that was incurred? (Round \"standard kilograms of plastic per helmet\" to 1 decimal placo.) 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. (Round your actual materials price to two decimal places, and round your final answers to the nearest whole dollar. Indicate the effect of each variance by selecting \"F for favorable, \"U\" for unfavorable, and \"None\" for no offect (i.e., zero variance).) Materials price variance Materials quantity variance

Solution

1) Number of helmets 3600 Standard Kilogram of plastic per helmet 0.5 Total Standard kilogram allowed 1800 Standard Cost per kilogram $ 7 Total Standard Cost $       12,600 Actual Cost Incurred $       13,068 Total Standard Cost $       12,600 Total Material Variance $ 468 U 2) Material Price Variance $ 792 F Material Quantity Variance $         1,260 U Working: a. Actual Price per unit = Actual Material cost/Actual Material used = $       13,068 / 1980 = $ 6.60 b. Material Price Variance = (Standard Price- Actual Price)*Actual Quantity = (7.0-6.6)*1980 = $ 792 F c. Material Quantity variance = (Standard Quantity-Actual Quantity)*Standard Price = (1800-1980)*7 = $         1,260 U