Question

Standard Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (1,900 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	3,200	lbs.	$0.48	per lb.
Vinegar	180	gal.	2.90	per gal.
Corn syrup	15	gal.	10.70	per gal.
Salt	72	lbs.	2.70	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 08-99 were as follows:

3,300 lbs. of tomatoes

173 gal. of vinegar

16 gal. of corn syrup

71 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	$fill in the blank 1
Vinegar	fill in the blank 2
Corn syrup	fill in the blank 3
Salt	fill in the blank 4
Total	$fill in the blank 5
Standard unit materials cost per pound	$fill in the blank 6

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.

Ingredient	Materials Quantity Variance	Favorable/Unfavorable
Whole tomatoes	$fill in the blank 7	Unfavorable
Vinegar	fill in the blank 9	Favorable
Corn syrup	fill in the blank 11	Unfavorable
Salt	fill in the blank 13	Favorable
Total direct materials quantity variance	$fill in the blank 15	Unfavorable

Answer 1

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	3200*.48 = 1536
Vinegar	180*2.9 = 522
Corn syrup	15*10.70 = 160.5
Salt	72*2.7 = 194.40
Total	2412.90
Standard unit materials cost per pound	2412.90/1900 = 1.27

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.

Ingredient	Materials Quantity Variance	Favorable/Unfavorable
Whole tomatoes	(3200-3300)*0.48 = 48	Unfavorable
Vinegar	(180-173)*2.9 = -20.30	Favorable
Corn syrup	(15-16)*10.70 = 10.70	Unfavorable
Salt	(72-71)*2.7 = -2.7	Favorable
Total direct materials quantity variance	35.70	Unfavorable