Exercise 8-4 Direct Materials Variances [LO8-4]

Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the companys products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,400 helmets, using 2,176 kilograms of plastic. The plastic cost the company $16,538.

According to the standard cost card, each helmet should require 0.56 kilograms of plastic, at a cost of $8.00 per kilogram.

Required:

1.

According to the standards, what cost for plastic should have been incurred to make 3,400 helmets? How much greater or less is this than the cost that was incurred? (Round Standard kilograms of plastic per helmet to 2 decimal places.)

Number of helmets
Standard kilograms of plastic per helmet
Total standard kilograms allowed
Standard cost per kilogram
Total standard cost
Actual cost incurred
Total standard cost
Total material varianceunfavorable

2.	Break down the difference computed in (1) above into a materials price variance and a materials quantity variance. (Round your actual materials price to two decimal places, and round your final answers to the nearest whole dollar. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Materials price variance
Materials quantity variance