Question

Standard Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,700 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	2,800	lbs.	$ 0.51	per lb.
Vinegar	160	gal.	$ 3.10	per gal.
Corn syrup	14	gal.	$ 11.30	per gal.
Salt	64	lbs.	$ 2.80	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:

2,900 lbs. of tomatoes

154 gal. of vinegar

15 gal. of corn syrup

63 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

(a) Calculation of standard unit material cost per pound for a standard batch

Ingrediant	Standard quantity	Standard price	Standard cost per batch ($)
Whole tomatoes	2,800 lbs.	$0.51/ lb	1,428
Vinegar	160 gal.	$3.10 / gal.	496
Corn syrup	14 gal.	$11.30/ gal.	158.2
Salt	64 lbs.	$2.80/ lb.	179.2
Total			2,261.4

Standard unit material cost per pound = 2,261.4/1,700

= $ 1.33

(b) Material quantity variance = Standard price x ( Standard quantity - Actual quantity )

Ingredient	Material quantity variance	Favorable/Unfavorable
Whole tomatoes	0.51 x ( 2,800 - 2,900 ) = - 51	Unfavorable
Vinegar	3.10 x ( 160 - 154 ) = 18.6	Favorable
Corn syrup	11.30 x ( 14 - 15 ) = - 11.30	Unfavorable
Salt	2.80 x ( 64 - 63 ) = 2.80	Favorable
Total material quantity variance	- 40.9	Unfavorable