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

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$ 3.30
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160
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$ 3.10
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$ 11.30
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to tomato characteristics. Assume that the actual quantities of
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Standard Quantity
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