Question

Standard Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,800 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	4,700	lbs.	$ 0.45	per lb.
Vinegar	260	gal.	$ 2.70	per gal.
Corn syrup	22	gal.	$ 10.00	per gal.
Salt	104	lbs.	$ 2.50	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:

4,900 lbs. of tomatoes

250 gal. of vinegar

23 gal. of corn syrup

103 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

Ingredient	Calculation	Standard Cost per Batch
Whole tomatoes	4700*0.45	2115
Vinegar	260*2.7	702
Corn syrup	22*10	220
Salt	104*2.5	260
Total		3297
Standard unit materials cost per pound	Total/2800	1.1775

standard unit materials cost per pound = $ 1.1775 rounding off to nearest cent = $ 1.18

As the actual no. of batches produced is not given in the data of question. the variances are calculated for 1 batch of ketchup. assuming 1 actual batch is 2800 pounds

Material Quantity Variance = Standard price * (Standard quantity - Actual Quantity)

Ingredient	Calculation	Amount	Materials Quantity Variance	Favorable/Unfavorable
Whole tomatoes	0.45*(4700-4900)	$90.00	90	Unfavorable
Vinegar	2.7*(260-250)	$27.00	-27	Favorable
Corn syrup	10*(22-23)	$10.00	10	Unfavorable
Salt	2.5*(104-103)	$2.50	-2.5	Favorable
Total direct materials quantity variance			70.5	Unfavorable

Note : - As instructed from the question, the favorable variances were shown with negative signs and the unfavorable variances were shown with positive signs.