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 20-gallon batch. 3,500 ounces of grape concentrate at $0.06 per ounce 21 pounds of granulated sugar at $0.54 per pound 25 lemons at $0.67 each 40 yeast tablets at $0.24 each 80 nutrient tablets at $0.11 each 2,000 ounces of water at $0.008 per ounce Hank estimates that 5% of the grape concentrate is wasted, 17% of the sugar is lost, and 23% 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

Ounces of grapes to be input into process = 3500 / 95% = 3684 ounces

Pounds of Sugar to be input into process = 21 / 83% = 25 pounds

Lemons to be input into process = 25 / (100-23)% = 32 lemons

Standard cost for 20 gallon batch:

Grapes concentrate = 3684 * $0.06 = $221.04

Granulated sugar = 25 * $0.54 = $13.50

Lemons = 32 * $.67 = $21.44

Yeast Tablets = 40 * $0.24 = $9.60

Nutrient Tablets = 80 * $0.11 = $8.80

Water = 2000 * $0.008 = $16

Total Standard Cost for 20 gallons = $290.34

Standard cost of the ingredients for one gallon of wine = $290.34 / 20 = $14.517

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