Exercise 10-1 Direct Materials Variances [LO10-1 Bandar Industries Berhad of Mal

Question

Exercise 10-1 Direct Materials Variances [LO10-1 Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the co North American market, requires a special plastic. During the quarter ending June 30, the company manufactured helmet for the 3,400 helmets using 2,312 kilograms of plastic. The plastic cost the company $15,259. According to the standard cost card, each helmet should require O 60 kilograms of plastc,at a cost of $7.00 per klogram. Required 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,400 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 3,400 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 fevorable, "u" for unfavoreble, and "None" for no effect (i.e., zero variance). Input all amounts es positive values. Do not round intermediote calculations) ard cost variance

Explanation / Answer

Standared Quantity of Kilogram Standared Qty per Unit* Actual Output .60*3400 2040 Standard cost Allocated for Actual Output Standared Quantity of Kilogram *Standared Rate 2040*7 14280 Material Spending Actual Cost -Standard cost Allocated for Actual Output 15259-14280 979 Unfavorable Material Price Varaince (Actual Qty)*(AR-SR) =15259-2312*7 925 Favorable Materials Quantity Varaince (Actual -Standared Qty)*SR (2312-2040)*7 1904 Unfavorable

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