Question

please be as clear and as simple as possible. I am trying to understand it. show me the steps, not only the answers. thank you in advance.

E25-2 Compute standard materials costs Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch. 3,000 ounces of grape concentrate at $0.06 per ounce 54 pounds of granulated sugar at $0.30 per pound 60 lemons at $0.60 each 50 yeast tablets at $0.25 each 50 nutrient tablets at $0.20 each 2,600 ounces of water at $0.005 per ounce Hank estimates that 4% of the grape concentrate is wasted, 10% of the sugar is lost, and 25% of the lemons cannot be used. Instructions Compute the standard cost of the ingredients for one gallon of wine. (Carry computations to two decimal places.) NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". Amount per gallon Standard Waste Standard Usage Standard Price Standard Cost per Gallon Ingredient Grape concentrate Sugar 4% 10% $0.06 0.30 Lemons 25% 0% 0.60 0.25 Yeast Nutrient 0.20 0.005 Water 0% Standard cost for one gallon of wine

Answer 1

Solution:

First we calculate the amount of ingredients:

A		B		C = A × B
3,000	Ounces of grape concentrate at	$0.06	per ounce	$180.00 (3,000 × $0.06)
54	pounds of granulated sugar	$0.30	per pound	$16.20(54 ×$0.30)
60	lemons at	$0.60	each	$36 (60 × $0.60)
50	yeasts tablets at	$0.25	each	$12.50(50 × $0.25)
50	nutrient tablets at	$0.20	each	$10.00(50 × $0.20)
2,600	ounces of water at	$0.005	per ounce	$13(2600 × $0.005)
	Total cost for 50 gallons			$267.70

Waste values:

Grape concentrate wasted ($180 ×4%)	$180 ×0.04	$7.20
Sugar lost ($16.20 ×10%)	$16.20 ×0.10	$1.62
Lemon lost ($36 × 25%)	$36 ×0.25	$9.00
Cost of waste and loss materials		$17.82
Total cost including waste, lost and amount($17.82 +$267.70)		$285.52

The total cost of 50 gallons =$285.52

Then, the cost of 1 gallon =$285.52/50 gallons

Now, the standard cost for per gallon =$5.72