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 3,500 helmets, using 2,555 kilograms of plastic. The plastic cost the company $16,863.

According to the standard cost card, each helmet should require 0.64 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 3,500 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,500 helmets?

3. What is the materials spending variance?

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

Answer 1

material quantity variance is (2555-2240)*7 = $2205 unfavorable variance

0 Standard Quantity of Rave plastic required for i helmet is 0.64kg. for 3500 helmets = 3500 x 0.84 kgs SQ = 2240 kgs ☺ Given standard price: $7 lkgo = 2240 x 7 Sex ca = [f LS 680 3 matericel Spending variance is It is expected to incar $15680 But we have incurred $16863 ($1183) unfavourable for variance = ($1183). D Material price variame = (AP-SP)×AQ (- +] * 2555 X 2555 & h o ($1022). Risk favorable

It is the difference between actual usage and standard usage of raw materials at standard price