Standard Product Cost, Direct Materials Variance Condiments Company uses standar
ID: 2405310 • Letter: S
Question
Standard Product Cost, Direct Materials Variance
Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,000 pounds) has the following standards:
The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch K-111 were as follows:
a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent.
b. Determine the direct materials quantity variance for batch K-111. 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.
Standard Quantity Standard Price Whole tomatoes 1,700 lbs. $ 0.38 per lb. Vinegar 90 gal. $ 2.30 per gal. Corn syrup 8 gal. $ 8.40 per gal. Salt 36 lbs. $ 2.10 per lb.Explanation / Answer
Answer a. Ingredient Standard Cost per Batch Whole Tomatoes - 1,700 lbs X $0.38 646.00 Vinegar - 90 gal. X $2.30 207.00 Corn syrup - 8 gal. X $8.40 67.20 Salt - 36 lbs X $2.10 75.60 Total 995.80 Standard Unit Material Cost per Pound 1.00 Answer b. Material Quantity Variance = (SQ - AQ) X SR Whole Tamatoes = (1,700 lbs - 1,800 lbs) X $0.38 = 38.00 (U) Vinegar = (90 gal. - 86 gal.) X $2.30 = 9.20 (F) Corn syrup = (8 gal. - 9 gal.) X $8.40 = 8.40 (U) Salt = (36 lbs - 35 lbs.) X $2.10 = 2.10 (F) Total Direct Material Quantity Variance 35.10 (U)
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