Question

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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

`Hank Itzek

Ingredient	Amt per Gallon	Standard waste	Standard usage	Standard Price $	Standard cost/Gallon
	a	b	a-b	d	a*d	for a	for b
Grape concentrate	60 oz	2.40 oz	57.60 oz	3.46	207.36	=3000/50	=60*4%
Sugar	1.08 lb	0.108 lb	0.972 lb	0.29	0.31	=54/50	=1.08*10%
Lemons	1.20	0.30	0.90	0.54	0.65	=60/50	=1.20*25%
Yeast	1.00	-	1.00	0.25	0.25	=50/50
Nutrient	1.00	-	1.00	0.20	0.20	=50/50
Water	52 oz	-	52 oz	0.26	13.52	=2600/50
Standard Price / Gallon					222.29

a

Qty Required for 1 Unit of B	3.00
Standard Price	5.00
Actual Price	4.70
Standard Qty	28,500	=9500*3
Actual Qty	29,000
Material Price variance	8,700.00	(Standard Price - Actual Price)*Actual Qty
Material Quantity variance	-2,500.00	(Standard Qty - Actual qty)*Standard Price

Total Material variance = $8,700-$2,500=$6,200 favorable

b

Qty Required for 1 Unit of B	3.00
Standard Price	5.00
Actual Price	5.15
Standard Qty	28,500	=9500*3
Actual Qty	28,000
Material Price variance	-4,200.00	(Standard Price - Actual Price)*Actual Qty
Material Quantity variance	2,500.00	(Standard Qty - Actual qty)*Standard Price

Total Material variance = -$4,200+$2,500=-$1,700 unfavorable