Question

Standard product cost, direct materials variance

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

Standard Quantity Standard price

Whole tomatoe 4,200 lbs. $0.54 per lb.

Vinegar 230 gal. $ 3.30 per gal.

Corn syrup 20 gal. $ 12.00 per gal.

Salt 92 lbs. $ 3.00 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 water

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.

Ingredients Standard cost per batch

Whole tomatoes $

Vinegar $

Corn syrup $

Salt $

Total $

Standard unit materials cost per pound $

b. Determine the direct material 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.

Ingredients. Material quantity variance Favorable/Unfavorable

Whole tomatoes $

Vinegar. $

Corn syrup. $

Salt. $

Total. $

Standard unit materials cost per pound $

Answer 1

Ans-a- The standard unit materials cost per pound for a standard batch....

Ingredients	Standard Price ($)	Standard quantity	Standard Cost
Whole tomatoes	0.54	4,200	2,268
Vinegar	3.30	230	759
Corn syrup	12.00	20	240
Salt	3.00	92	276
Total			$3,543
Standard unit materials cost per pound			$3,543/2,500=1.42 per pound

Ans-b- The direct material quantity variance for batch k-111:

Ingredients	Materials Quantity Variance	Favorable/Unfavorable
Whole tomatoes	0.54*(4,400-4,200)	$108 Unfavorable
Vinegar	3.30*(221-230)	-$29.7 Favorable
Corn syrup	12.00*(21-20)	$12 Unfavorable
salt	3.00*(91-92)	-$3 Favorable
Total direct material quantity variance		$108+$12-$29.7-$3 =$87.30

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