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 4,000 helmets, using 2,840 kilograms of plastic. The plastic cost the company $21,584.

According to the standard cost card, each helmet should require 0.65 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 4,000 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 4,000 helmets?

3. What is the materials spending variance?

4. What is the materials price variance and the materials quantity variance?

Explanation / Answer

1) Standard quantity allowed = 4000*0.65 = 2600 Kg

2) Standard cost allowed = 2600*8 = 20800

3) Material spending variance = 20800-21584 = 784 U

4) Material price variance = (8*2840-21584) =1136 F

Material quantity variance = (2600-2840)*8 = 1920 U

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