Standard Product Cost, Direct Materials Variance Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (800 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 1,300 lbs. $ 0.50 per lb. Vinegar 70 gal. $ 3.10 per gal. Corn syrup 6 gal. $ 11.10 per gal. Salt 28 lbs. $ 2.80 per lb. The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch K-111 were as follows: 1,400 lbs. of tomatoes 67 gal. of vinegar 7 gal. of corn syrup 27 lbs. of salt a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent. Ingredient Standard Cost per Batch Whole tomatoes $ Vinegar $ Corn syrup $ Salt $ Total $ Standard unit materials cost per pound $ b. Determine the direct materials quantity variance for batch K-111. 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. Ingredient Materials Quantity Variance Favorable/Unfavorable Whole tomatoes $ Vinegar $ Corn syrup $ Salt $ Total direct materials quantity variance $ Check My Work
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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Standard Product Cost, Direct Materials Variance
Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (800 pounds) has the following standards:
Standard Quantity Standard Price Whole tomatoes 1,300 lbs. $ 0.50 per lb. Vinegar 70 gal. $ 3.10 per gal. Corn syrup 6 gal. $ 11.10 per gal. Salt 28 lbs. $ 2.80 per lb. The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch K-111 were as follows:
1,400 lbs. of tomatoes 67 gal. of vinegar 7 gal. of corn syrup 27 lbs. of salt a. Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent.
Ingredient Standard Cost per BatchWhole tomatoes $ Vinegar $ Corn syrup $ Salt $ Total $ Standard unit materials cost per pound $ b. Determine the direct materials quantity variance for batch K-111. 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.
Ingredient Materials Quantity Variance Favorable/Unfavorable Whole tomatoes $ Vinegar $ Corn syrup $ Salt $ Total direct materials quantity variance $
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