Question

KraftFoodsInc.manufactures and sells a nutrition drink for children called Kool- Aid. It wants to develop a standard cost per gallon. The following are required for production of a 100-gallon batch: • 1,960 ounces of lime Kool-Aid at $.12 per ounce • 40 pounds of granulated sugar at $.60 per pound • 63 kiwi fruit at $.50 each • 100 protein tablets at $.90 each • 4,000 ounces of water at $.003 per ounce Pane estimates that 2% of the lime Kool-Aid is wasted, 20% of the sugar is lost, and 10% of the kiwis cannot be used.

INSTRUCTIONS Compute the standard cost of the ingredients for one gallon of the nutrition drink. What decision would you advise the company ́s CEO to make.

Answer 1

Answer 4.07
Ingredient	Amount Per Gallon	Standard Waste
Lime Kool-Drink	19.60	2%
Sugar	0.40	20%
Kiwis	0.63	10%
Protein Tablets	1.00	-
Water	40.00	-
	Standard Usage	Standard Price	Standard Cost
Lime Kool-Drink	20.00	0.12	2.40
Sugar	0.50	0.60	0.30
Kiwis	0.70	0.50	0.35
Protein Tablets	1.00	0.90	0.90
Water	40.00	0.003	0.12
			4.07
(a).98X = 19.6 ounces X =20.00
(b).80X = .40 pounds X =.50
(c).90X = .63 kiwis X =.70