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Homework answers / question archive / Bandar Industries manufactures sporting equipment
Bandar Industries manufactures sporting equipment. One of the company's products is a football helmet that requires special plastic. During the quarter ending June 30, the company manufactured 3,600 helmets, using 2,160 kilograms of plastic. The plastic cost the company $16,416.
According to the standard cost card, each helmet should require 0.54 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 3,600 helmets?
2. What is the standard materials cost allowed (SQ × SP) to make 3,600 helmets?
3. What is the materials spending variance?
4. What is the materials price variance and the materials quantity variance?
(For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)
1) Computation of Standard Quantity of kilograms of plastic (SQ) that is allowed to make 3,600 helmets:
Standard quantity of kilograms of plastic (SQ) = 3600 * 0.54 = 1944 Kilograms
2) Computation of Standard Materials Cost allowed (SQ × SP) to make 3,600 helmets:
Standard materials cost allowed (SQ × SP) = 1944 * $8 = $15,552
3) Computation of Materials Spending Variance:
Materials spending variance = Standard materials cost allowed - Actual materials cost = $15,552 - $16,416 = $864 Unfavorable
4) Computation of Materials Price Variance and the Materials Quantity Variance:
Actual Price of material = $16,416 / 2,160 = $7.60
Materials price variance = (SP - AP) *Actual quantity = ($8 - $7.60) * 2,160 = $864 favorable
Materials quantity variance = (1944 - 2160) * $8 = $1,728 Unfavorable
