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 3,100 helmets, using 1,829 kilograms of plastic. The plastic cost the company $13,900.      According to the standard cost card, each helmet should require 0.51 kilograms of plastic, at a cost of $8.00 per kilogram. Required: 1. According to the standards, what cost for plastic should have been incurred to make 3,100 helmets? How much greater or less is this than the cost that was incurred? (Round Standard kilograms of plastic per helmet to 2 decimal places.) Number of helmets Standard kilograms of plastic per helmet Total standard kilograms allowed Standard cost per kilogram Total standard cost Actual cost incurred Total standard cost Total material variance-unfavourable Break down the difference computed in (1) above into a materials price variance and a materials quantity variance. (Round your actual materials price to two decimal places, and round your final answers to the nearest whole dollar. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Materials price variance Materials quantity variance

Answer 1

• All working forms part of the answer
• Requirement 1

A	Number of helmets	3100
B	Standard kilograms of plastic per helmet	0.51
C=AxB	Total standard kilograms allowed	1581
D	Standard cost per kilogram	$                             8.00
E=CxD	Total standard cost	$                   12,648.00
F	Actual cost incurred	$                   13,900.00
G=E	Total standard cost	$                   12,648.00
H=F-G	Total material variance-unfavourable	$                     1,252.00

• Requirement 2

Material Price Variance =	(Standard Price - Actual Price) x Actual Quantity
Material Price Variance =	[$8 - ($13900/1829)] x 1829
Material Price Variance =	(8 - 7.599781301) x 1829
Material Price Variance =	$732 FAVOURABLE
Material Quantity Variance =	(Standard quantity - Actual Quantity) x Standard rate
Material Quantity Variance =	(1581 kgs - 1829kgs) x $8
Material Quantity Variance =	$1984 UNFAVOURABLE