Standard Product Cost, Direct Materials Variance Condiments Company uses standar
ID: 2432982 • 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. $ 0.53 per lb. Vinegar 90 gal. $ 3.20 per gal. Corn syrup 8 gal. $ 11.80 per gal. Salt 36 lbs. $ 2.90 per lb.Explanation / Answer
Standard unit materials cost per pound for a standard batch.
Ingredient
Standard Quantity
Standard Price
Standard Cost per Batch
Whole tomatoes
1700
$ 0.53
$ 901.00
Vinegar
90
$ 3.20
$ 288.00
Corn syrup
8
$ 11.80
$ 94.40
Salt
36
$ 2.90
$ 104.40
Total
$ 1,387.80
Standard unit materials cost per pound*
$ 1.39
*Standard unit materials cost per pound
(1387.8/1000)
$1.39
Material Quantity variance
Ingredient
Materials Quantity Variance
Favorable/Unfavorable
Whole tomatoes
$-53.00
U
Vinegar
$ 12.80
F
Corn syrup
$-11.80
U
Salt
$ 2.90
F
Total direct materials quantity variance
$-49.10
U
Working Note
Ingredient
(A) Standard Quantity
(B) Actual Quantity
(C ) Standard Price
(D=(B-A)*C) Materials Quantity Variance
Whole tomatoes
1700
1800
$ 0.53
$ -53.00
Vinegar
90
86
$ 3.20
$ 12.80
Corn syrup
8
9
$ 11.80
$ -11.80
Salt
36
35
$ 2.90
$ 2.90
Total direct materials quantity variance
$-49.10
Standard unit materials cost per pound for a standard batch.
Ingredient
Standard Quantity
Standard Price
Standard Cost per Batch
Whole tomatoes
1700
$ 0.53
$ 901.00
Vinegar
90
$ 3.20
$ 288.00
Corn syrup
8
$ 11.80
$ 94.40
Salt
36
$ 2.90
$ 104.40
Total
$ 1,387.80
Standard unit materials cost per pound*
$ 1.39
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