Exercise Il-2 Hank Itzek manufactures and sells homemade wine, and he wants to d
ID: 2527631 • Letter: E
Question
Exercise Il-2 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 690-gallon batch. 2,500 ounces of grape concentrate at $0.07 per ounce 1,173 pounds of granulated sugar at $0.52 per pound 690 lemons at $0.67 each 1,380 yeast tablets at $0.20 each 2,070 nutrient tablets at $0.10 each 2,400 ounces of water at $0.001 per ounce Hank estimates that 6% of the grape concentrate is wasted, 17% of the sugar is lost, and 31% 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.) Standard Cost Per GallonExplanation / Answer
Calculation of standard cost
Particulars
units
Rate per unit
Total
Total after loss
Calculation for loss
Grape concentrate
2,500
$0.07
175
$186.17
($175/(100%-6%))
Granulated sugar
1,173
$0.52
609.96
$734.89
($609.96/(100%-17%))
Lemons
690
$0.67
462.3
$670.00
($462.3/(100%-31%))
Yeast tables
1,380
$0.20
276
$276.00
nutrient
2,070
$0.10
207
$207.00
water
2,400
$0.001
2.4
$2.40
Total
$1.56
$1,732.66
$2,076.46
Standard cost for 690 gallon batch
$2,076.46
No of gallons
690
Ans
Standard cost for each gallon batch
$3.01
Calculation of standard cost
Particulars
units
Rate per unit
Total
Total after loss
Calculation for loss
Grape concentrate
2,500
$0.07
175
$186.17
($175/(100%-6%))
Granulated sugar
1,173
$0.52
609.96
$734.89
($609.96/(100%-17%))
Lemons
690
$0.67
462.3
$670.00
($462.3/(100%-31%))
Yeast tables
1,380
$0.20
276
$276.00
nutrient
2,070
$0.10
207
$207.00
water
2,400
$0.001
2.4
$2.40
Total
$1.56
$1,732.66
$2,076.46
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