Hank Itzek manufactures and sells homemade wine, and he wants to develop a stand

Question

Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 10-gallon batch. 2,500 ounces of grape concentrate at $0.06 per ounce 17 pounds of granulated sugar at $0.36 per pound 13 lemons at SO.69 each 40 yeast tablets at $0.27 each 20 nutrient tablets at $0.14 each 1,400 ounces of water at $0,005 per ounce Hank estimates that 6% of the grape concentrate is wasted, 11% of the sugar is lost, and 21% of the lemons cannot be used. Compute the standard cost of the ingredients for one gallon of wine. (Round intermediate calculations and final answer to 2 decimal places, e.g. 1.25.) Standard Cost Per Gallon 19.72 Click if you would like to Show Work for this question:

Explanation / Answer

Normal loss in the production process will have to be considred to set the standard cost per unit of a product.

Standard quantity for

grape = 2500 / (1-0.06) = 2660 ounces

lemons = 13/(1-0.21) =17 lemons

Sugar = 17/(1-0.11) = 19 pounds

Ingedients Standard quantity price standard price grape 2660 ounces 0.06 per ounce $ 159.60 Sugar 19 pounds 0.36 per pound $ 6.84 lemons 17 lemons 0.69 per lemon $ 11.73 yeast tablets 40 tablets $0.27 each $ 10.80 nutrient tablets 20 tablets 0.14 each $ 2.80 Water 1400 ounces $0.005 per ounce $ 7.00 Total cost $ 198.77 Number of gallons 10 Standard cost per gallon $ 19.88

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