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Standard Product Cost, Direct Materials Variance Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,300 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 2,200 lbs. $ 0.50 per lb. Vinegar 120 gal. $ 3.10 per gal. Corn syrup 10 gal. $ 11.10 per gal. Salt 48 lbs. $ 2.80 per lb. The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch K-111 were as follows: 2,300 lbs. of tomatoes 115 gal. of vinegar 11 gal. of corn syrup 47 lbs. of salt a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent. Ingredient Standard Cost per Batch Whole tomatoes Vinegar Corn syrup Salt Total Standard unit materials cost per pound b. Determine the direct materials quantity variance for batch K-111. If required, round amounts to the nearest cent. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Ingredient Materials Quantity Variance favorable/Unfavorable Whole tomatoes Unfavorable Vinegar Favorable Corn syrup 19 Unfavorable Salt Favorable Total direct materials quantity variance Unfavorable Feedback Check My Work Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit). The direct material cost variance is the difference between the actual and standard material cost. Remember the process discussed in chapter for calculating standard cost Learning Objective 2, Learning Objective 3. Check My Work

Answer 1

1. Standard for Batch of 1300 lbs of Ketchup
	Std Qty	Unit	Std Price	Per	Std Cost/Batch
Whole Tomatoes	2200	lbs	0.50	lbs	1100.00
Vinegar	120	gal	3.10	gal	372.00
Corn Syrup	10	gal	11.10	gal	111.00
Salt	48	lbs	2.80	lbs	134.40
Total Standard Cost					1717.40
Pounds per Batch					1300.00
Per Pound/ Standard Cost					1.32
2.Material Quantity Variance
Material Quantity Variance =	Standard Price	(Std Qty – Act. Qty)
	Std Price/Unit	Std Qty	Act Qty	Quantity Variance	Remarks
	A	B	C	A*(B-C)
Whole Tomatoes	0.50	2200.00	2300.00	-50.00	Unfavorable
Vinegar	3.10	120.00	115.00	15.50	Favorable
Corn Syrup	11.10	10.00	11.00	-11.10	Unfavorable
Salt	2.80	48.00	47.00	2.80	Favorable
				-42.80	Unfavorable