EXERCISE 10-2 Variations in direct material

Bandar Industries Berhad of Malaysia manufactures sports equipment. One of the company's products, a football helmet for the US market requires a special plastic. In the quarter that ended on June 30, the company manufactured 35,000 helmets with 22500 kilos of plastic. The plastic costs the company $ 171,000.

According to the standard cost sheet, each helmet must carry 0.6 kilos of plastic, at a cost of eight units per kilo.

Question 1a. Determine the cost that must have been incurred to manufacture 35,000 helmets (TOTAL STANDARD COST).

Question 1b. Determine how much higher or lower the total standard cost is than the actual cost incurred (TOTAL VARIATION).

question 2. Breakdown of total material variation between the variation in the price of materials and the variation in the quantity of materials