Dan Engles manufactures and sells homemade wine, and he wants to develop a stand
ID: 2384967 • Letter: D
Question
Dan Engles manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch. 3,000 ounces of grape concentrate at $0.04 per ounce 54 pounds of granulated sugar at $0.35 per pound 60 lemons at $0.60 each 50 yeast tablets at $0.25 each 50 nutrient tablets at $0.20 each 2,500 ounces of water at $0.004 per ounce Dan estimates that 4% of the grape concentrate is wasted, 10% of the sugar is lost, and 20% of the lemons cannot be used. Compute the standard cost of the ingredients for one gallon of wineExplanation / Answer
Let’s start by figuring how much we have to buy of the ingredients to have the wastage and still have enough to make 50 gallons.
Let’s start with the 4% waste of grape concentrate.
This is not 4% of the concentrate that goes into the juice, but 4% of the purchased concentrate.
Grape Concentrate:
Let X = amount that must be purchased before waste
For one gallon we need 60 0z
X - .04X = 60 (amount needed for 1 gallon_
.96 x = 60
X = 62.50 standard amount purchased
Sugar:
Let X = amount that must be purchased before waste
For one gallon we need 54/50 = 1.08 pounds of input
X - .10X = 1.08 pounds
.9X = 1.08 pounds
X = 1.2 pounds
Lemons:
We need 60/50 lemons for 1 gallon = 1.20 lemons
X - .20X = 1.20
.8X = 1.20
X = 1.50 lemons
Now calculate the total standard cost of materials.
Ingredient:
Grape concentrate
Sugar (54 ÷ 50)
Lemons (60 ÷ 50)
Yeast
Nutrient
Water (2,500 ÷ 50)
Amount used:
60* oz.
1.08 lb.
1.2
1 tablet
1 tablet
50 oz.
waste:
4%
10%
20%
0%
0%
0%
amount bought
62.5 oz.
1.2 lb.
1.5
1 tablet
1 tablet
50 oz.
cost
$.04
.35
.60
.25
.20
.004
price
$2.50
.42
.90
.25
.20
.20
$4.47
standard cost=4.47
Ingredient:
Grape concentrate
Sugar (54 ÷ 50)
Lemons (60 ÷ 50)
Yeast
Nutrient
Water (2,500 ÷ 50)
Amount used:
60* oz.
1.08 lb.
1.2
1 tablet
1 tablet
50 oz.
waste:
4%
10%
20%
0%
0%
0%
amount bought
62.5 oz.
1.2 lb.
1.5
1 tablet
1 tablet
50 oz.
cost
$.04
.35
.60
.25
.20
.004
price
$2.50
.42
.90
.25
.20
.20
$4.47
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