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 3,300 helmets, using 1,947 kilograms of plastic. The plastic cost the company $14,797. According to the standard cost card, each helmet should require 0.53 kilograms of plastic, at a cost of $8.00 per kilogram. 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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 3,300 helmets, using 1,947 kilograms of plastic. The plastic cost the company $14,797.
According to the
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.)
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