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 460-gallon batch.

Hank estimates that 3% of the grape concentrate is wasted, 12% of the sugar is lost, and 30% 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.)

3,200 ounces of grape concentrate at $0.07 per ounce 828 pounds of granulated sugar at $0.40 per pound 874 lemons at $0.81 each 2,300 yeast tablets at $0.20 each 920 nutrient tablets at $0.10 each 3,000 ounces of water at $0.007 per ounce

Explanation / Answer

Standard Cost for 460 gallons Material Quantity Unit of Wastage Material Rate Total Measure Used $ Cost $ Grape Concentrate 3200 Ounces 96.00 3104.00 0.07 217.28 Granulated Sugar 828 Pounds 99.36 728.64 0.40 291.46 Lemons 874 nos 262.20 611.80 0.81 495.56 Yeast Tablets 2300 nos 2300.00 0.20 460.00 Nutrient Tablets 920 nos 920.00 0.10 92.00 Water 3000 Ounces 3000.00 0.01 21.00 Total Cost 1577.29 Cost per gallon of wine          3.43

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