Question

Standard Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,000 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	1,700	lbs.	$ 0.38	per lb.
Vinegar	90	gal.	$ 2.30	per gal.
Corn syrup	8	gal.	$ 8.40	per gal.
Salt	36	lbs.	$ 2.10	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:

1,800 lbs. of tomatoes

86 gal. of vinegar

9 gal. of corn syrup

35 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	$_______	_________

Answer 1

Answer a.
Ingredient	Standard Cost per Batch
Whole Tomatoes - 1,700 lbs X $0.38	646.00
Vinegar - 90 gal. X $2.30	207.00
Corn syrup - 8 gal. X $8.40	67.20
Salt - 36 lbs X $2.10	75.60
Total	995.80
Standard Unit Material Cost per Pound	1.00
Answer b.
Material Quantity Variance = (SQ - AQ) X SR
Whole Tamatoes = (1,700 lbs - 1,800 lbs) X $0.38	=	38.00	(U)
Vinegar = (90 gal. - 86 gal.) X $2.30	=	9.20	(F)
Corn syrup = (8 gal. - 9 gal.) X $8.40	=	8.40	(U)
Salt = (36 lbs - 35 lbs.) X $2.10	=	2.10	(F)
Total Direct Material Quantity Variance		35.10	(U)