Question

Standard Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,500 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	4,200	lbs.	$ 0.42	per lb.
Vinegar	230	gal.	$ 2.60	per gal.
Corn syrup	20	gal.	$ 9.30	per gal.
Salt	92	lbs.	$ 2.30	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:

4,400 lbs. of tomatoes

221 gal. of vinegar

21 gal. of corn syrup

91 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	$

Answer 1

To  Determine the standard unit materials cost per pound for a standard batch.

we use the Formula ACTUAL QUANTITY x STANDARD PRICE

whole tomatoes (4400 x 0.42) = 1848

vinegar (221 x 2.60) = 574.6

corn syrup (21 x 9.3) = 195.3

salt (91 x 2.3) = 209.3

TOTAL = 2827.2

Standard unit materials cost per pound = i.e 1.13 per pound

b)

Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) x Standard Price

whole tomatoes (4200 - 4400)0.42 = 84 Unfavorable

vinegar (230 - 221)2.60 = -23.4 Favorable

corn syrup (20 - 21)9.3 = 9.3 Unfavorable

salt (92 - 91)2.3 = -2.3   Favorable

TOTAL =   67.6