Question

Standard Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,000 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	1,700	lbs.	$ 0.37	per lb.
Vinegar	90	gal.	$ 2.30	per gal.
Corn syrup	8	gal.	$ 8.20	per gal.
Salt	36	lbs.	$ 2.10	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:

1,800 lbs. of tomatoes

86 gal. of vinegar

9 gal. of corn syrup

35 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	$
Vinegar	$
Corn syrup	$
Salt	$
Total direct materials quantity variance	$

Answer 1

Answers

• All working forms part of the answer
• Requirement ‘a’

Ingredient	Standard quantity	Standard price	Standard Cost per Batch
Whole tomatoes	1,700	$                    0.37	$          629.00
Vinegar	90	$                    2.30	$          207.00
Corn syrup	8	$                    8.20	$            65.60
Salt	36	$                    2.10	$           75.60
Total			$          977.20
Standard unit materials cost per pound			$              0.98

• Requirement ‘b’

Ingredient	Standard quantity	Actual Quantity	Difference	Standard price	Materials Quantity Variance	Favorabl e/ Unfavorable
	[A]	[B]	[C = B – A]	[D]	[E = C x D] = ANSWER	ANSWER
Whole tomatoes	1,700	1,800	100	$                    0.37	$            37.00	Unfavourable
Vinegar	90	86	(4)	$                    2.30	$            (9.20)	Favourable
Corn syrup	8	9	1	$                    8.20	$             8.20	Unfavourable
Salt	36	35	(1)	$                    2.10	$            (2.10)	Favourable
Total direct materials quantity variance					$            33.90	Unfavourable