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.

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 2,201 kilograms of plastic. The plastic cost the company $16,728.

According to the standard cost card, each helmet should require 0.63 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 3,100 helmets?

2. What is the standard materials cost allowed (SQ × SP) to make 3,100 helmets?

3. What is the materials spending variance?

4. What is the materials price variance and the materials quantity variance?

 

Explanation

1.

Number of helmets produced (a)	3,100
Standard kilograms of plastic per helmet (b)	0.63
Standard quantity of kilograms allowed (a) × (b)	1,953

2.

Standard quantity of kilograms allowed (a)		1,953
Standard cost per kilogram (b)	$	8.00
Standard cost allowed for actual output (a) × (b)	$	15,624

3.

Actual cost incurred (given) (a)	$	16,728
Total standard cost allowed (b)	$	15,624
Materials spending variance (a) − (b)	$	1,104	U

4.

Actual Quantity of Input, at Actual Price (AQ × AP)			Actual Quantity of Input, at Standard Price (AQ × SP)			Standard Quantity Allowed for Output, at Standard Price (SQ × SP)
$16,728			2,201 kilograms × $8.00 per kilogram = $17,608			1,953 kilograms* × $8.00 per kilogram = $15,624
	Materials price variance, $880 F			Materials quantity variance, $1,984 U
	Spending Variance, $1,104 U

*3,100 helmets × 0.63 kilograms per helmet = 1,953 kilograms

Thanks