Hnak Itzek manufactures and sells homemade wine and he wants

Hnak 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 5% of the grape concentrate is wasted, 14% of the sugar is lost, and 23% of the lemons cannot be used.

Compute the standard cost of the ingredients for one gallon of wine

2,800 ounces of grape concentrate at $0.04 per ounce

110 pounds of granulated sugar at $0.48 per pound

115 lemons at $0.69 each

240 yeast tablets at $0.25 each

180 nutrient tablets at $0.14 each

2,700 ounces of water at $0.006 per ounce

Solution

STANDARD COST SHEET Per Batch of 60 Gallons Per Gallon Grape concentrate = 2800*0.04/95% = $    117.89 $        1.97 Granulated sugar = 110*0.48/86% = $      61.40 $        1.02 Lemons = 115*0.69/77% = $    103.05 $        1.72 Yeast tablets = 240*0.25 = $      60.00 $        1.00 Nutrient tablets = 180*0.14 = $      25.20 $        0.42 Water = 2700*0.006 = $      16.20 $        0.27 Total standard cost $    383.74 $        6.40