Question

Baker Bakery's procedure for making popcorn pie consisted of: 0.5 gallons of popcorn syrup and 0.5 hour of direct labor to make the pie. The expected cost for the syrup was $9 per gallon. Overhead was to be applied at $12 per direct labor hour. Direct labor was to be paid $10 per hour. Baker Bakery purchased 10,000 gallons of popcorn syrup for $100,000 in cash. a) What is the total actual cost of the popcorn syrup purchase? $ b) What is the total standard cost of the popcorn syrup purchased? $ c) What is the amount of the total materials purchase price variance as a result of the purchase? $ d) The materials purchase price variance is

Answer 1

Ans.1	Total actual cost of syrup purchase = 100000
	Actual cost per gallon = Total actual cost / Gallons purchased
		100000 / 10000
		$10 per gallon
Ans.2	Total standard cost of syrup purchased = Standard quantity * Standard price per gallon purchase
		5000 * 9
		45000
	*Standard quantity = Actual quantity * standard quantity per unit of actual quantity
		10000 * 0.5
		5000
Ans.3	Total materials purchase price variance = Total standard cost - Total actual cost
		45000 - 100000
		55000	unfavorable
Ans.4	Materials price variance = (Standard price - Actual price) * Actual quantity
		(9 - 10) * 10000
		10000	unfavorable