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 520-gallon batch. 3,400 ounces of grape concentrate at $0.06 per ounce 572 pounds of granulated sugar at $0.53 per pound 832 lemons at $0.80 each 2,080 yeast tablets at $0.24 each 2,080 nutrient tablets at $0.12 each 1,300 ounces of water at $0.007 per ounce Hank estimates that 5% of the grape concentrate is wasted, 14% of the sugar is lost, and 27% 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

Costs including wastage for 520 gallons:

3,400 ounces of grape concentrate at $0.06 per ounce = 3400*0.06/0.95= $214.736

572 pounds of granulated sugar at $0.53 per pound = 572 * 0.53/ 0.86 = $352.511

832 lemons at $0.80 each = 832 * 0.80 / 0.73 = $911.78

2080 yeast tablets at $0.24 each = 2080*0.24 = $499.2

2080 nutrient tablets at $0.12 each = 2080*0.12 = $249.6

1300 ounces of water at $0.007 per ounce = 1300*0.007 = $9.1

Total cost for 520 gallons = $2236.93

Cost per gallon = $4.301

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