Question

# Standard Product Cost, Direct Materials Variance Condiments Company uses standards to control its materials costs. Assume...

Standard Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,700 pounds) has the following standards:

 Standard Quantity Standard Price Whole tomatoes 4,500 lbs. \$ 0.44 per lb. Vinegar 250 gal. \$ 2.70 per gal. Corn syrup 22 gal. \$ 9.80 per gal. Salt 100 lbs. \$ 2.40 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:

 4,700 lbs. of tomatoes 240 gal. of vinegar 23 gal. of corn syrup 99 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 \$

Check My Work

 Ans.a Standard cost: Ingredient (A) Standard quantity (B) Standard price (C) Standard cost per batch (B*C) Whole tomatoes 4500 0.44 1980 Vinegar 250 2.7 675 Corn syrup 22 9.8 215.6 Salt 100.00 2.4 240 Total 3110.6 Standard unit materials cost per pound 1.15 Standard unit materials cost per pound = 3110.6 / 2700 pounds 1.15 per pound Ans.b Direct material Quantity variances; Ingredient Material quantity variance fav/unf Whole tomatoes -88 U Vinegar 27 F Corn syrup -9.8 U Salt 2.4 F Total -68.4 U Direct material Quantity variance = (SQ - AQ) * SP *Calculations; Whole tomatoes (4500-4700)*0.44 -88 Vinegar (250-240)*2.70) 27 Corn syrup (22-23)*9.80 -9.8 Salt (100-99)*2.40 2.4

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