Question

In: Accounting

Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet...

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 2,268 kilograms of plastic. The plastic cost the company $14,969.

According to the standard cost card, each helmet should require 0.57 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 3,600 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,600 helmets?

3. What is the materials spending variance?

SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 5,100 of these meals using 2,000 direct labor-hours. The company paid its direct labor workers a total of $28,000 for this work, or $14.00 per hour.

According to the standard cost card for this meal, it should require 0.40 direct labor-hours at a cost of $13.50 per hour.

Required:

1. What is the standard labor-hours allowed (SH) to prepare 5,100 meals?

2. What is the standard labor cost allowed (SH × SR) to prepare 5,100 meals?

3. What is the labor spending variance?

4. What is the labor rate variance and the labor efficiency variance?

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

Standard Quantity or Hours Standard Price
or Rate
Standard
Cost
Direct materials 7.10 pounds $ 1.80 per pound $ 12.78
Direct labor 0.20 hours $ 12.00 per hour $ 2.40

During the most recent month, the following activity was recorded:

  1. Nineteen thousand two hundred and fifity pounds of material were purchased at a cost of $1.70 per pound.

  2. All of the material purchased was used to produce 2,500 units of Zoom.

  3. 400 hours of direct labor time were recorded at a total labor cost of $5,200.

Required:

1. Compute the materials price and quantity variances for the month.

2. Compute the labor rate and efficiency variances for the month.

(For all requirements, 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. Round your intermediate calculations to the nearest whole dollar

Solutions

Expert Solution

Question 1
1
Standard quantity of kilograms 2052 =3600*0.57
2
Standard materials cost allowed 14364 =2052*7
3
Materials spending variance 605 U =14969-14364
Materials price variance 907 F =14969-(2268*7)
Materials quantity variance 1512 U =7*(2268-2052)
Question 2
1
Standard labor-hours allowed 2040 =5100*0.40
2
Standard labor cost allowed 27540 =2040*13.50
3
Labor spending variance 460 U =28000-27540
4
Labor rate variance 1000 U =28000-(2000*13.5)
Labor efficiency variance 540 F =13.5*(2040-2000)
Question 3
Materials price variance 1925 F =19250*(1.7-1.8)
Materials quantity variance 2700 U =1.8*(19250-2500*7.1)
Labor rate variance 400 U =5200-(400*12)
Labor efficiency variance 1200 F =12*(400-2500*0.2)

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