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 4,000 helmets, using 2,960 kilograms of plastic. The plastic cost the company $22,496.

According to the standard cost card, each helmet should require 0.66 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 4,000 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—unfavorable 2. 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).) Material price variance (dollar amount/ f or u) Material quantity variance (dollar amount/ f or u)

Answer 1

Answer:
1	Number of Helmets produced	4,000.00
	Standard kilogram of plastic per helmet	0.66
	Total standard material allowed	2,640.00	(4,000*0.66)
	Standard Csot per kilogram	$                       8.00
	Total standard material cost	$             21,120.00	(2640*$8)
	Actual cost incurred	$             22,496.00
	Total standard cost	$             21,120.00
	Total Material cost Variance	$               1,376.00	Unfavourable	(22,496-21,120)
2	Direct material
	Actual Cost			Difference	Flexible Budget			Difference	Standard Cost
	Actual material	Actual Rate	Actual Cost		Actual hours	Standard rate			Standard hours	Standard rate	Standard cost
	2,960	$                       7.60	$                22,496.00		2,960.00	$                 8.00	$      23,680.00		2,640	$                 8.00	$      21,120.00
		(22,496/2960)		$             1,184.00				$      (2,560.00)	(4,000*0.66)
	Material price variance	$               1,184.00	(23,680-22496)	Favourable
	Material quantity variance	$             (2,560.00)	(21,120-23,680)	Unfavourable