Question

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	$

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Answer 1

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