Logan Fruit Drink Company planned to make 209,000 containers of apple juice. It

Question

Logan Fruit Drink Company planned to make 209,000 containers of apple juice. It expected to use two cups of frozen apple concentrate to make each container of juice, thus using 418,000 cups of frozen concentrate. The standard price of one cup of apple concentrate is $0.26. Logan actually paid $115,101.00 to purchase 426,300 cups of concentrate, which was used to make 210,000 containers of apple juice. Required: b. Compute the actual price per cup of concentrate. (Round your answer to 2 decimal places.) tual price per cup

Explanation / Answer

Solution:

b.

Actual Price Per Cup of Concentrate = Actual Purchase Price / Actual Cups of concentrate purchased = $115,101 / 426,300 = $0.27

Actual Price Per Cup of Concentrate = $0.27 per cup

c.

Actual Production = 210,000 Containers

Standard Quantity for actual production = Actual Production x Standard Quantity per Unit = 210,000 x 2 cups of frozen apple concentrate per container = 210,000 x 2 = 420,000 cups of concentrate

Standard Quantity required to produce the containers = 420,000 cups of concentrate

d.

Material Price Variance = Actual Quantity Purchased (Standard Price – Actual Price)

= 426,300 ($0.26 - $0.27) = $4,263 U

e.

Material Usage Variance = Standard Price (Standard Quantity for actual production – Actual Quantity used)

= $0.26 (420,000 – 426,300) = $1,638 U

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