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 2,046 kilograms of plastic. The plastic cost the company $13,504. According to the standard cost card, each helmet should require 0.55 kilograms of plastic, at a cost of $7.00 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? (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 Materials spending variance Materials price variance Materials quantity variance

Answer 1

Solution 1
The standard quantity of kilograms allowed
Actual output	3,300
Standard usage	0.55
Standard quantity allowed	3300*0.55
Standard quantity allowed	1,815
Solution 2
Standard Material cost allowed
Standard quantity allowed	1,815
Standard price	$                          7
Standard cost	1815*7
Standard cost	$                12,705
Solution 3
Material spending variance
Actual output	3300
Material Variance
	Standard	Budgeted based on actual results	Actual
Price	$                     7.00	$                                7.00	$           6.60	13504/2046
Quantity	0.55	1,815	2,046
Cost per unit	$                     3.85	$                      12,705.00	$ 13,504.00
Total Material cost variance		$                          (799.00)	Unfavorable
Solution 4
Material spending price and usage variance
Material Price variance	= (Standard price - Actual Price) * Actual usage
	'(7-6.60)*2046
	$                818.00	Favorable
Material quantity variance	= (Standard Quantity - Actual Quantity) * Budgered Price
	'(1815-2046)*7
	$           (1,617.00)	Unfavorable