Question

Kraft Heinz Company (KHC) uses standards to control its materials costs. Assume that a batch of ketchup (6,000 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	7,500	lbs.	$0.40	per lb.
Vinegar	600	gal.	1.75	per gal.
Corn syrup	50	gal.	8.00	per gal.
Salt	500	lbs.	0.70	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 H3001 were as follows:

7,850 lbs. of tomatoes

575 gal. of vinegar

63 gal. of corn syrup

480 lbs. of salt

a. Determine the standard unit materials cost per pound for a standard batch. Round your answer to the nearest cent.
$ per lb.

b.  Determine the total direct materials quantity variance for batch H3001. Round your answer to the nearest cent. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.

Answer 1

Ans:

a) Standard unit material cost per pound =standard Quantity*Cost /Total Standard Pounds

Whole tomatoes (7500*.40)	3000
Vinegar (600*1.75)	1050
Corn syrup (50*8)	400
Salts (500*.7)	350
Total	4800

Standard unit material cost per pound =Total Standard cost/Total Standard Pounds

= 4800/6000 = 0.80 per pound

b) Material quantity variance= Standard rate X (standard quantity-Actual Quantity)

White tomatoes (7500-7850)*.40	140 U
Vinegar (600-575)*1.75	-43.75 F
Corn Syrup (50-63)*8	104 U
Salt (500-480)*.70	-14 F
Total	186.25 U

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