Chec Exercise 10-1 Direct Materials Variances [LO10-1) Bandar Industries Berhad
ID: 2566783 • Letter: C
Question
Chec Exercise 10-1 Direct Materials Variances [LO10-1) 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 3,300 helmets, using 1,980 kilograms of plastic. The plastic cost the company $13,068 eBook Hint According to the standard cost card, each helmet should require 0.51 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 3,300 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 3,300 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 no round intermediate calculations.) 1tdard quantity of kilograms allowed 2. Standard cost allowed for actual output 3. Materials spending variance 4 Materials price variance Materials quantity varianceExplanation / Answer
Bandar Industries
Number of helmets 3,300
Standard kilogram of plastic per helmet 0.51
Total standard kilograms allowed for 3,300 helmets = 3,300 x 0.51 =1,683 kilograms
Standard cost per kilogram = $7
Standard cost for 1,683 kilograms = $7 x 1,683 =$11,781
Actual cost for 3,300 helmets $13,068
Standard cost allowed for 3,300 helmets $11,781
Material spending variance = standard cost – actual cost =$1,287 U
Material spending variance = $1,287U
Material price variance = AQ (SP - AP)
AQ = 1,980 kilograms
SP = $7 per kilogram
AP = $($13,068/1,980) = $6.60
Material price variance = 1,980 ($7 - $ 6.60) = 1,980 x 0.4 =$792 F
Material price variance = $792F
Material quantity variance –
Material quantity variance = SP (SQ –AQ)
Standard price = $7 per kilogram
SQ = 1,683 kilograms
AQ = 1,980 kilograms
Material quantity variance = $7 (1,683 – 1,980) =$7 x 297
Material quantity variance = $2,079 U