Standard Product Cost, Direct Materials Variance Condiments Company uses standar

Question

Standard Product Cost, Direct Materials Variance Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (800 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-54 were as follows: Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent. Determine the direct materials quantity variance for batch K-54. 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.

Explanation / Answer

Standard price for preparing 800 pounds of Kechup = $ 887

Standard price for preparing 1 pound of Kechup = $ 887/800

= $ 1.11

2) Variane between Standard and Actual quantity used is as follows :-

Total Material Cost Variance is $ 43.3 (Adverse)

Computation of Standard Cost (800 pounds) Ingredients Std. Quantity Price Total Std. price Tomatoes 1300 0.44 572 Vinegar 70 2.7 189 Corn Syrup 6 9.8 58.8 Salt 28 2.4 67.2 Total 887

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