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 3,100 helmets, using 2,232 kilograms of plastic. The plastic cost the company $16,963. 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 3,100 helmets? 2. What is the standard materials cost allowed (SQ * SP) to make 3,100 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 favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) Standard quantity of kilograms allowed Standard cost allowed for actual output 2. 3. 4. Materials spending variance Materials price variance Materials quantity variance

Answer 1

	Number of helmets	3,100
	Standard KG of plastic per helmet	0.65
1	Total Standard KG allowed	2,015
	Standard cost per KG	$8
2	Total Standard cost	$16,120
	Actual cost incurred	$16,963
	Total Standard cost(calculated above)	$16,120
3	Total material variance	$843	(Unfavourable)
4	Material Price variance = (Standard price - Actual Price)*Actual quantity
	Material Price variance = $8*2,232 - $16,963 =$17,856 - $16,963 =$893(Favourable)
5	Material quantity variance = Standard price(Standard Quantity - Actual Quantity)
	Material quantity variance = $16,120 - $8.00*2,232 =$16,120 - $17,856 =$1,736(Unfavourable)