Question

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,900...

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 $

Homework Answers

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
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