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 2,360 kilograms of plastic. The plastic cost the company $17,936. According to the standard cost card, each helmet should require 0.50 kilograms of plastic, at a cost of $8.00 per kilogram Required: 1. 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.) 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-unfavorable 16,000 0

Explanation / Answer

According to standard what cost incurred on 4000 helmets and differ from standard cost :

b) Breaking down :

Material price variance = (standard price-actual price)actual quantity

= (8*2360-17936)

Material price variance = 944 F

Material quantity variance = (standard quantity-actual quantity)standard price

= (4000*.50-2360)8

Material quantity variance = 2880 U

No of helmet 4000 standard kilogram of plastic per helmet .50 Total standard kilograms allowed 2000 standard price per kilograms 8 Total standard cost 16000 Actual cost 17936 Total standard cost 16000 Total material variance-Unfavourable 1936

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