Condiments Company uses standards to control its materials costs. Assume that a

Question

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,700 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes Vinegar Corn syrup Salt 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: 2,900 lbs. of tomatoes 154 gal. of vinegar 15 gal. of corn syrup 63 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 Whole tomatoes Vinegar Corn syrup Salt Total 2,800 lbs 160 gal 14 gal 64 lbs 0.40 per lb 2.40 per gal 8.90 per gal 2.20 per lb Standard Cost per Bat ch Standard unit materials cost per pound

Explanation / Answer

a.

b. Material quantity variance is calculated as (Standard quantity specified for actual production - Actual quantity used) x Standard price per unit

Ingredient Standard cost per batch Standard cost per pound of K-54($) Whole tomatoes 2800 x 0.40 = 1120 1120/1700 =0.6588 Vinegar 160 x 2.40 =384 384/1700= 0.2258 Corn syrup 14 x 8.9 =124.60 124.60/1700 = 0.0733 Salt 64 x 2.20 =140.8 140.80/1700 = 0.0828 Total 1.04

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