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.	$ 0.53	per lb.
Vinegar	90	gal.	$ 3.20	per gal.
Corn syrup	8	gal.	$ 11.80	per gal.
Salt	36	lbs.	$ 2.90	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

Standard unit materials cost per pound for a standard batch.
Ingredient	Standard Quantity	Standard Price	Standard Cost per Batch
Whole tomatoes	1700	$    0.53	$      901.00
Vinegar	90	$    3.20	$      288.00
Corn syrup	8	$ 11.80	$         94.40
Salt	36	$    2.90	$      104.40
Total			$   1,387.80
Standard unit materials cost per pound*			$           1.39

*Standard unit materials cost per pound

(1387.8/1000)

$1.39

Material Quantity variance
Ingredient	Materials Quantity Variance	Favorable/Unfavorable
Whole tomatoes	$-53.00	U
Vinegar	$ 12.80	F
Corn syrup	$-11.80	U
Salt	$   2.90	F
Total direct materials quantity variance	$-49.10	U

Working Note
Ingredient	(A) Standard Quantity	(B) Actual Quantity	(C ) Standard Price	(D=(B-A)*C) Materials Quantity Variance
Whole tomatoes	1700	1800	$      0.53	$ -53.00
Vinegar	90	86	$      3.20	$    12.80
Corn syrup	8	9	$   11.80	$ -11.80
Salt	36	35	$      2.90	$   2.90
Total direct materials quantity variance				$-49.10