Question

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: 2. Standard Quantity Standard Price 3. Whole tomatoes 2,200 lbs 0.40 per Ib. $2.40 per gal 120 gal Vinegar 4. Corn syrup 8.90 per gal 10 gal 5. 2.20 per Ib Salt 48 bs 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 6. 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

Answer 1

Solution a:

Ingradient	Standard cost per batch
Whole tomatoes	$880.00
Vinegar	$288.00
Corn Syrup	$89.00
Salt	$105.60
Total	$1,362.60
Standard unit material cost per pound	$1.05

Solution b:

Material quantity variance = (AQ - SQ) * SP

Whole tomatoes = (2300 - 2200) * $0.40 = $40 Unfavorable

Vinegar = (115 - 120) * $2.40 = -$12 Favorable

Cory Syrup = (11 - 10) * $8.90 = $8.90 Unfavorable

Salt = (47 - 48) * $2.20 = -$2.20 Unfavorable

Total direct material quantity variance - $34.70 Unfavorable