The standard quantity of kilograms of plastic (SQ) that is allowed to make 3,400 helmets is calculated as follows:
SQ = Number of helmets produced × Standard quantity per helmet
SQ = 3,400 helmets × 0.50 kilograms per helmet
SQ = 1,700 kilograms of plastic
The standard materials cost allowed (SQ × SP) to make 3,400 helmets is calculated as follows:
Standard materials cost allowed = Standard quantity × Standard price per kilogram
Standard materials cost allowed = 1,700 kilograms × $8.00 per kilogram
Standard materials cost allowed = $13,600
The materials spending variance is calculated as the difference between the actual cost of the plastic used and the standard materials cost allowed:
Materials spending variance = Actual cost - Standard materials cost allowed
Materials spending variance = $15,246 - $13,600
Materials spending variance = $1,646
The materials price variance is calculated as the difference between the actual price paid for the plastic and the standard price per kilogram multiplied by the actual quantity used:
Materials price variance = (Actual price - Standard price) × Actual quantity
Materials price variance = ($15,246/2,006 kg - $8.00/kg) × 2,006 kg
Materials price variance = ($7.60 - $8.00) × 2,006 kg
Materials price variance = -$0.40 × 2,006 kg
Materials price variance = -$802.40
The materials quantity variance is calculated as the difference between the actual quantity used and the standard quantity allowed multiplied by the standard price per kilogram:
Materials quantity variance = (Actual quantity - Standard quantity) × Standard price
Materials quantity variance = (2,006 kg - 1,700 kg) × $8.00/kg
Materials quantity variance = 306 kg × $8.00/kg
Materials quantity variance = $2,448
Therefore, the materials spending variance is $1,646, the materials price variance is -$802.40, and the materials quantity variance is $2,448.
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 3,400 helmets, using 2,006 kilograms of plastic. The plastic cost the company $15,246. According to the standard cost card, each helmet should require 0.50 kilograms of plastic, at a cost of $8.00 per kilogram. Required: What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,400 helmets? What is the standard materials cost allowed (SQ × SP) to make 3,400 helmets? What is the materials spending variance? What is the materials price variance and the materials quantity variance?
1 answer