Question

Exercise 10-1 Direct Materials Variances (LO10-1] 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 3,900 helmets, using 2,808 kilograms of plastic. The plastic cost the company $18,533. According to the standard cost card, each helmet should require 0.63 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 3,900 helmets? 2. What is the standard materials cost allowed (SQ SP) to make 3,900 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

Standard quantity of kilograms allowed 2457 standard cost allowed actual ocetput $17199 materials spending variance 1-$1334 U materials price Variance $1123 materials quantity variance -$2457 U ccork ang notes standard quantity of kilograms allowed I = 0 63 kilograms & 39oo helmets T = 2457 kalograms for actual output Standard cost allowed = 2457 X $ 7 = $17199

- - materials spending variance = Estandard quantityx standard price? [Actual quantity & Actual price] & [2457 × $7] - [28088 $6.67 E $17199 - $ 18533 E-$1334 unfavourable cu material price variance = Lactual quantity & Standard price] Lactreal quantity & Actual price] = [2808 * $7] - 12808 * $ 6.60 = $19656 - $ 18533 = $1123 favourable CFO

material quantity variance = (standard quantity & standard price) Lactucel quantity x standard price [2457 × $7] - [2808 * $ 7] T = $17lag - $19656 I = $2457 Unfavourable.