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 $
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 |
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