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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 3,600 helmets, using 2,664 kilograms of plastic. The plastic cost the company $20,246. 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 3,600 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 3,600 helmets? 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance?

Respuesta :

Answer and Explanation:

The computation is shown below;

1. The Standard quantity of kilogram for making 3,600 helmets is

= Number of helmets × number of kilograms required

= 3,600 × 0.65

= 2,340

2. The standard material cost is

= Standard quantity × standard price

= 2,340 × $8

= $18,720

3. Material spending variance is

= Plastic cost - standard material cost

= $20,246 - $18,720

= $1,526 unfavorable

4. The material price and quantity varaince is

Price variance

= Plastic cost - (number of plastic × cost)

= $20,246 - (2,664 × $8)

= $1,066 favorable

Quantity variance

= Standard Cost × (Actual quantity - standard quantity)

= $8 × (2,664 - 2,340)

= $2,592 unfavorable

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