Question

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,900 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 3,200 lbs. $0.45 per lb. Vinegar 180 gal. 2.70 per gal. Corn syrup 15 gal. 10.00 per gal. Salt 72 lbs. 2.50 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 08-99 were as follows: 3,300 lbs. of tomatoes 173 gal. of vinegar 16 gal. of corn syrup 71 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 08-99. 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.

Ingredient	Standard quantity		Standard price	=	Standard cost per batch
Tomatoes	3,200		$0.45	=	$1,440
Vinegar	180		$2.70	=	486
Corn syrup	15		10	=	150
Salt	72		2.50	=	180
Total		2,256
Standard unit material cost per pound ($2,256/1,900)		$1.19

b.

Ingredient	Material quantity variance	Favorable/Unfavorable
Whole tomatoes	(3,200-3,300)*$0.45 = $45	Unfavorable
Vinegar	(180-173)*$2.70 = -$18.9	Favorable
Corn syrup	(15-16)*$10 = $10	Unfavorable
Salt	(72-71)*$2.50 = -$2.50	Favorable
Total direct quantity material variance	$33.6	Unfavorable