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 150-gallon batch.

3,900 ounces of grape concentrate at $0.07 per ounce
225 pounds of granulated sugar at $0.45 per pound
270 lemons at $0.70 each
450 yeast tablets at $0.28 each
600 nutrient tablets at $0.17 each
1,900 ounces of water at $0.005 per ounce

Hank estimates that 5% of the grape concentrate is wasted, 18% of the sugar is lost, and 26% 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 $

Explanation / Answer

(3900x0.07/0.95 + 225x0.45/0.82 + 270x0.70/0.74 + 450x0.28 + 600x0.17 + 1900x0.005)/150

= (287.36 + 123.47 + 255.40 + 126 + 102 + 9.5)/150
= 903.73/150
= $6.024

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