Question: Standard Product Cost, Direct Materials Variance
Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,900 pounds) has the following standards:
|
Standard Quantity |
Standard Price |
| Whole tomatoes |
4,800 |
lbs. |
$ 0.54 |
per lb. |
| Vinegar |
270 |
gal. |
3.30 |
per gal. |
| Corn syrup |
23 |
gal. |
12.00 |
per gal. |
| Salt |
108 |
lbs. |
3.00 |
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-54 were as follows:
| 5,000 lbs. of tomatoes |
| 259 gal. of vinegar |
| 24 gal. of corn syrup |
| 107 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-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.
| Ingredient |
Materials Quantity Variance |
Favorable/Unfavorable |
| Whole tomatoes |
$ |
SelectFavorableUnfavorableItem 8 |
| Vinegar |
$ |
SelectFavorableUnfavorableItem 10 |
| Corn syrup |
$ |
SelectFavorableUnfavorableItem 12 |
| Salt |
$ |
SelectFavorableUnfavorableItem 14 |
| Total direct materials quantity variance |
$ |
SelectFavorableUnfavorableItem 16 |