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 35,000 helmets, using 22,500 kilograms of plastic. The plastic cost the company $171,000.According to the standard cost card, each helmet should require 0.6 kilgrams of plastic at a cost of $8 per kilogram.REQUIRED:1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 35,000 helmets?2. What is the standard materials cost allowed (SQ X SP) to make 35,000 helmets?3. Wht is the materials spending variance?4. What is the materials price variance and the materials quantity variance?

Answer 1

Answer:

1.- 35,000 helment x 0.6 kilograms = 21,000 STD quantity

2.- 21,000 kilograms x $8 per kilogram = $168,000

3.- 9,000 F

4.- 12,000 U

Explanation:

$(standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance$

std cost  $8.00

actual cost  $7.60

quantity 22,500

$(8.00 - 7.60) \times 22,500 = DM \: price \: variance$

difference  $0.40

The actual cost for each kilogram is lower than expected. This means the copamny saved cash in the purchase. This variance is favorable.

saved 0.40 per kilograms x 22,500 purchased

price variance  $9,000.00

$(standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity\: variance$

std quantity 21000.00

actual quantity 22500.00

std cost  $8.00

$(21,000 - 22,500) \times 8 = DM \: quantity\: variance$

difference -1500.00

The actual quantity was higher than expected, this variance will be unfavorable

1,500 extra kilograms x $8 each =

quantity variance  $(12,000.00)