Pane Corp. manufactures and sells a nutrition drink for children. It wants to de

Question

Pane Corp. manufactures and sells a nutrition drink for children. 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-Drink at $.10 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 $.002 per ounce Pane estimates that 2% of the lime Kool-Drink 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.

Explanation / Answer

Take your original list of ingredient and 'add' in the amount of waste that is stated for each. Take your new list of ingredients and calculate the cost for each of them (multiply the total quantity of an item by the 'unit' cost.) Then add up the total. That is for a 50 gallon batch. Divide that total by 50 for the single gallon cost.

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