Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,400 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 4,000 Ibs. $0.37 per Ib. Vinegar 220 gal. 2.30 per gal. Corn syrup 19 gal. 8.20 per gal. Salt 88 Ibs. 2.10 per Ib. The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch 08-99 were as follows: 4,200 Ibs. of tomatoes 211 gal. of vinegar 20 gal. of corn syrup 87 Ibs, of salt a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent. Standard Cost Ingredient per Batch Whole tomatoes Vinegar Corn syrup Sait Total Standard unit materials cost per pound b. Determine the direct materials quantity variance for batch 08-99. If required, round amounts to the nearest cent. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Materials Quantity Ingredient Variance Favorable/Unfavorable Whole tomatoes Vinegar Corn syrup Salt Total direct materials quantity variance
Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,400 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 4,000 Ibs. $0.37 per Ib. Vinegar 220 gal. 2.30 per gal. Corn syrup 19 gal. 8.20 per gal. Salt 88 Ibs. 2.10 per Ib. The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch 08-99 were as follows: 4,200 Ibs. of tomatoes 211 gal. of vinegar 20 gal. of corn syrup 87 Ibs, of salt a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent. Standard Cost Ingredient per Batch Whole tomatoes Vinegar Corn syrup Sait Total Standard unit materials cost per pound b. Determine the direct materials quantity variance for batch 08-99. If required, round amounts to the nearest cent. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Materials Quantity Ingredient Variance Favorable/Unfavorable Whole tomatoes Vinegar Corn syrup Salt Total direct materials quantity variance
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Standard Product Cost, Direct Materials Variance
Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,400 pounds) has the following standards:
Standard Quantity Standard Price
Whole tomatoes
4,000 lbs.
$0.37 per Ib.
Vinegar
220 gal.
2.30 per gal.
Corn syrup
19 gal.
8.20 per gal.
Salt
88 lbs.
2.10 per Ib.
The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch 08-99 were as follows:
4,200 lbs. of tomatoes
211 gal. of vinegar
20 gal. of corn syrup
87 lbs. of salt
a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent.
Standard Cost
Ingredient
per Batch
Whole tomatoes
Vinegar
Corn syrup
Salt
Total
Standard unit materials cost per pound
b. Determine the direct materials quantity variance for batch 08-99. If required, round amounts to the nearest cent. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Materials Quantity
Ingredient
Variance
Favorable/Unfavorable
Whole tomatoes
Vinegar
Corn syrup
Salt
Total direct materials quantity variance
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