Standard Product Cost Direct Materials Variance Condiments C

Standard Product Cost, Direct Materials Variance Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,600 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 4,300 lbs. $ 0.38 per lb. Vinegar 240 gal. $ 2.30 per gal. Corn syrup 21 gal. $ 8.40 per gal. Salt 96 lbs. $ 2.10 per lb. 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: 4,500 lbs. of tomatoes 230 gal. of vinegar 22 gal. of corn syrup 95 lbs. of salt a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent. Ingredient Standard Cost per Batch Whole tomatoes $ Vinegar $ Corn syrup $ Salt $ Total $ Standard unit materials cost per pound $ 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. Ingredient Materials Quantity Variance Favorable/Unfavorable Whole tomatoes $ Unfavorable Vinegar $ Favorable Corn syrup $ Unfavorable Salt $ Favorable Total direct materials quantity variance $ Unfavorable

Solution

a Ingredient Standard Cost per Batch Hint Whole tomatoes $                        1,634.00 4,300 lbs.x $ 0.38 per lb. Vinegar $                           552.00 240 gal. x $ 2.30 per gal. Corn syrup $                           176.40 21 gal. x $ 8.40 per gal. Salt $                           201.60 96 lbs. x $ 2.10 per lb. Total $                        2,564.00 Standard unit materials cost per pound $                               0.99 (2564/2600) b Material Qty. Variance = (Actual qty. - Standard Qty)x Standard Price Ingredient Materials Quantity Variance Favorable/Unfavorable Hint Whole tomatoes 76 Unfavorable =(4500-4300)*0.38 Vinegar 23 Favorable =(240-230)*2.3 Corn syrup 8.4 Unfavorable =(22-21)*8.4 Salt 2.1 Favorable =(96-95)*2.1 Total direct materials quantity variance 59.3 Unfavorable