Free Flight Corporation, located in Denver, Colorado, produces bicycle accessories, including bicycle helmets which requires a rigid, crushable foam. During the quarter ending June 30, the company manufactured 3,800 helmets, using 2,736 kilograms of foam. The foam cost the company $18,058. According to the standard cost card, each helmet should require 0.66 kilograms of foam, at a cost of $7.00 per kilogram.
Required:
1. What is the standard quantity of kilograms of foam (SQ) that is allowed to make 3,800 helmets?
2. What is the standard materials cost allowed (SQ * SP) to make 3,800 helmets?
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.)
1. Standard quantity of kilograms allowed
2. Standard cost allowed for actual output
3. Materials spending variance
4. Materials price variance
Materials quantity variance

Answer:

1. Standard quantity of kilograms allowed 2508kg

2. Standard cost allowed for actual output $17,556

3. Materials spending variance $502 Unfavorable

4. Materials price variance $1094Favorable

Materials quantity variance $1596 unfavorable

Explanation:

1. Calculation to determine the standard quantity of kilograms of foam

Standard quantity of kilograms allowed = 0.66*3800

Standard quantity of kilograms allowed =2508kg

2. Calculation to determine the standard materials cost allowed

Standard cost allowed for actual output = 2508kg *7

Standard cost allowed for actual output=$17,556

3. Calculation to determine the materials spending variance using this formula

Material spending variance = Standard cost - Actual cost

Let plug in the formula

Material spending variance= $17,556- $18,058

Material spending variance= $502 Unfavorable

4. Calculation to determine the materials price variance and the materials quantity variance

Material price variance = (7- $18,058/2,736)*2,736

Material price variance = $1094Favorable

Material quantity variance =(2508kg-2,736)*7

Material quantity variance= $1596 unfavorable

Therefore:

1. Standard quantity of kilograms allowed 2508kg

2. Standard cost allowed for actual output $17,556

3. Materials spending variance $502 Unfavorable

4. Materials price variance $1094Favorable

Materials quantity variance $1596 unfavorable

You are analyzing two assets: collectible LEGO sets, and stock of Apple. In the last 5 years, LEGOs have had an annual volatility of 5%, annual return of 6%, and a CAPM beta (the correlation coefficient between the asset and the market risk-premium) of 1.6. Apple has had an annual volatility of 10%, an annual return of 8%, and a CAPM beta of 1.2. Is the following statement true or false?

According to CAPM, Apple has a higher expected return than LEGO.

You do not start saving money until age 46. On your 46th birthday you dutifully invest​ $10,000 each year until you finish your deposits when you reach the age of 65​ (you make the last deposit on your 65th​ birthday). The annual interest rate is 8​% that you earn on your deposits. Your brother starts saving​ $10,000 a year on his 36th birthday but stops making deposits after 10 years. He then withdraws the compounded sum when he reaches age 65. How much more money will your brother have than you at age​ 65?