Chapter 10, Problem 1E

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 35,000 helmets, using 22,500 kilograms of plastic. The plastic cost the company $171,000.
According to the standard cost card, each helmet should require 0.6 kilograms of plastic, at a cost of $8 per kilogram.

Required:

1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 35,000 helmets⁹
2. What is the standard materials cost allowed (SQ xSP) to make 35,000 helmets?
3. What is the materials spending variance?
4. What is the materials price variance and the materials quantity' variance⁹