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 3,300 helmets, using 2,442 kilograms of plastic. The plastic cost the company $18,559. According to the standard cost card, each helmet should require 0.69 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 3,300 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 3,300 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 of kilograms of plastic (SQ) that is allowed to make 3,300 helmets 3300*0.69= 2277 Kgs. 2. Standard materials cost allowed (SQ × SP) to make 3,300 helmets 2277*8= 18216 3. Materials spending variance Total std.cost-Total Actual cost 18216-18559= -343 UF Materials price variance Std. Price/Kg.-Actual price/Kg.)*Actual Qty. used (8-(18559/2442))*2442= 977 F Materials quantity variance (Std. Qty for actual prodn.-Actual Qty.)*Std. Price/Kg. (2277-2442)*8= -1320 UF MPV+MQV=MSp.V 977 F+1320(UF)=343(UF)

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