Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the

Question

Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30. the company manufactured 4,000 helmets, using 2,440 kilograms of plastic. The plastic cost the company $16,104. According to the standard cost card, each helmet should require 0.54 kilograms of plastic, at a cost of $7.00 per kilogram. According to the standards, what cost for plastic should have been incurred to make 4,000 helmets? How much greater or less is this than the cost that was incurred? (Round Standard kilograms of plastic per helmet to 2 decimal places.) Break down the difference computed in (1) above into a materials price variance and a materials quantity variance.

Explanation / Answer

Answer:

a)

b)

Material price variance = standard material(Standard cost - Actual Cost)

= 2,160 ($7- $16,104/2,440) = $864 (favorable)

Material Usage variance = Actual cost(Standard material - Actual material)

= $16,104/2,440 (2160 - 2440) = -$1,848 (unfavorable)

No of helmets 4000 Standard kilogram of platic per helmet 0.54 Total std. kilogram allowed 2160 Standard cost per kilogram $7 A Total standard cost 15120 B Actual cost incurred 16104 A-B Total material variance (In$) 984 (unfavorable)

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