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 2,232 kilograms of plastic. The plastic cost the company $14,731. According to the standard cost card, each helmet should require 0.65 kilograms of plastic, at a cost of $7.00 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?

Bandar Industries Berhad of Malaysia

1. The standard quantity of kilograms of plastic (SQ) that is allowed to make 3,100 helmets is:

= 2,015

2. The stand materials cost allowed (SQ * SP) is:

= $14,105

3. The materials spending variance is:

= $626 U

4. The materials price variance is:

= $893 F

The materials quantity variance is:

= $1,519 U

Explanation:

a) Data and Calculations:

Number of helmets manufacturing = 3,100

Units of direct materials used = 2,232 kilograms

Actual unit of direct materials used = 0.72 kilograms (2,232/3,100)

Cost of direct materials = $14,731

Unit cost of direct materials = $6.60 ($14,731/2,232)

Standard costs per kilogram = $7.00

Standard units of direct materials = 0.65 kilograms

1. The standard quantity of kilograms of plastic (SQ) that is allowed to make 3,100 helmets = 2,015 (3,100 * 0.65)

2. The stand materials cost allowed (SQ * SP) = $14,105 (2,015 * $7.00)

3. The materials spending variance = $626 U ($14,731 - $14,105)

4. The materials price variance = standard price - actual price * actual quantity used

= $7.00 - $6.60 * 2,232

= $893 F

The materials quantity variance = standard quantity - actual quantity *  standard price

= 2,015 - 2,232 * $7

= $1,519 U