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. Vinegar $ 0.45 per Ib. $ 2.70 per gal. $ 10.00 per gal. $ 2.50 per lb. 90 gal. 8 gal. 36 lbs. Corn syrup Salt 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

Answer 1

a)

Ingredient	Standard cost per batch ($)
whole tomatoes	765
vinegar	243
corn syrup	80
salt	90
total	1178
standard unit material cost per pound	1.2

b) unfavourable is represented as (+) and favourable as (-) as mentioned in question.

Ingredient	Material quantity variance ($)	favourable/unfavourable
whole tomatoes	45	unfavourable
vinegar	-10.8	favourable
corn syrup	10	unfavourable
salt	-2.5	favourable
total direct material quantity variance	41.7	unfavourable