Exercise 23-2 Hank Itzek manufactures and sells homemade wine, and he wants to d

Question

Exercise 23-2

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 60-gallon batch.

Hank estimates that 2% of the grape concentrate is wasted, 13% of the sugar is lost, and 24% 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.)

2,400 ounces of grape concentrate at $0.05 per ounce 107 pounds of granulated sugar at $0.40 per pound 66 lemons at $0.77 each 120 yeast tablets at $0.23 each 120 nutrient tablets at $0.15 each 3,300 ounces of water at $0.007 per ounce

Explanation / Answer

2,400 ounces of grape concentrate at $0.05 per ounce = $120
2% is wasted and including this=120/0.98 =$122.45
107 pounds of granulated sugar at $0.4 per pound =107*.4=$42.8
Including lost sugar of 13% =42.8/0.87=$49.20
66 lemons at $0.77 each =66*.77=$50.82
Including wasted lemons of 24% =50.82/0.76 =$66.87
120 yeast tablets at $0.23 each =120*0.23=$27.6
120 nutrient tablets at $0.15 each =120*.15=$18
3300 ounces of water at $0.007 per ounce = 3300*.007=$23.1

Total cost per 60 gallon batch =122.45+49.2+66.87+27.6+18+23.1=$307.22

std cost=307.22/60=$5.12 per gallon

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