Question

Exercise 9-4 Direct Materials Variances [LO9-4] 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 3,800 helmets, using 2,508 kilograms of plastic. The plastic cost the company $16,553. According to the standard cost card, each helmet should require 0.61 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 3,800 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 3,800 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.)

Answer 1

1. The standard quantity 2318kg

2. The standard materials cost allowed $ 16226

3.Materials Spending Variance= 327 Unfavorable

4. The materials price variance 327 Unfavorable

5. The materials quantity variance 1330 Unfavorable

Step-by-step explanation:

1. The standard quantity of kilograms of plastic (SQ) that is allowed to make 3,800 helmets= 3800* 0.61= 2318kg

2. The standard materials cost allowed (SQ × SP) to make 3,800 helmets= 3800*0.61*7= $ 16226

3. The materials spending variance= Purchase Price Variance= Actual Price *Actual Quantity - Standard Price * Actual Quantity

Materials Spending Variance= $16,553- $ 16226

Materials Spending Variance= 327 Unfavorable

4. The materials price variance = (Actual Price * Actual Quantity)- (Standard Price * Actual Quantity) = $16,553- $ 16226= 327 Unfavorable

5. The materials quantity variance= (Standard Price * Actual Quantity)-(Standard Price * Standard Quantity) =( 7* 2,508)- (7*2318kg)= 17556-16226= 1330 Unfavorable