Hank Itzek manufactures and sells homemade wine, and he wants to develop a stand

Question

Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch.

Hank estimates that 4% of the grape concentrate is wasted, 10% of the sugar is lost, and 25% of the lemons cannot be used.

Compute the standard cost of the ingredients for one gallon of wine. (Round intermediate calculations and final answer to 2 decimal places, e.g. 1.25.)

3,000 ounces of grape concentrate at $0.06 per ounce 54 pounds of granulated sugar at $0.30 per pound 60 lemons at $0.60 each 50 yeast tablets at $0.25 each 50 nutrient tablets at $0.20 each 2,600 ounces of water at $0.005 per ounce

Explanation / Answer

Answer: Standard Cost Per Gallon=$5.78 per gallon

3,000 ounces of grape concentrate at $0.06 per ounce = $180
Including wasted juice = 180 / 0.96 = $187.5
54 pounds of granulated sugar at $0.30 per pound = $16.2
Including lost sugar = 16.2 / 0.90 = $18
60 lemons at $0.60 each = $36
Including wasted lemons = $36 / 0.75 = $48
50 yeast tablets at $0.25 each = $12.5
50 nutrient tablets at $0.20 each = $10
2,600 ounces of water at $0.005 per ounce = $13

Total cost per 50 gallon batch = $289
289 /50 = $5.78 per gallon

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