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 2,310 kilograms of plastic. The plastic cost the company $17,556.

According to the standard cost card, each helmet should require 0.61 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 3,300 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?

Answer 1

1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,300 helmets?
Kilograms per each helmet	0.61
Actual number of helmets	3300
Standard quantity (SQ) (0.61*3300)	2013
2. What is the standard materials cost allowed (SQ × SP) to make 3,300 helmets?
Standard quantity (SQ) (0.61*3300)	2013
Standard cost per kilo gram	8
Standard Material cost (2013*8)	16104
3. What is the materials spending variance?
Standard Material cost (2013*8)	16104
Actual Material cost (2013*8)	17556
Material Spending Variance	-1452
Material Spending Variance	1452 Unfavourable
4. What is the materials price variance and the materials quantity variance?
Material Price Variance	AQ*(SP-AP)
Material Price Variance	(AQ*SP)-(AQ*AP)
Material Price Variance	2310*8 - 17556
Material Price Variance	924
Material Quantity Variance	SP*(SQ-AQ)
Material Quantity Variance	8*(2013 - 2310)
Material Quantity Variance	-2376