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 3,200 helmets, using 2,208 kilograms of plastic. The plastic cost the company $16,781.

According to the standard cost card, each helmet should require 0.61 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 3,200 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,200 helmets?

3. What is the materials spending variance?

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

Explanation / Answer

1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,200 helmets?

Standard quantity of kilograms allowed = (3200*.61) = 1952 kg

2. What is the standard materials cost allowed (SQ × SP) to make 3,200 helmets?

Standard material cost = 1952*8 = 15616

3. What is the materials spending variance?

Material spending variance = standard cost-actual cost = (15616-16781) = 1165 Unfavourable

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

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

= (8*2208-16781)

Material price variance = 883 Favourable

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

= (1952-2208)8

Material quantity variance = 2048 Unfavourable

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