Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,300 pounds) has the following standards: Standard Quantity Standard Price Whole tomatoes 3,800 lbs. $0.48 per lb. Vinegar 210 gal. 2.90 per gal. Corn syrup 18 gal. 10.70 per gal. Salt 84 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: 4,000 lbs. of tomatoes 202 gal. of vinegar 19 gal. of corn syrup 83 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 Costper Batch Whole tomatoes $ Vinegar Corn syrup Salt Total $ Standard unit materials cost per pound $ 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 QuantityVariance Favorable/Unfavorable Whole tomatoes $ Vinegar Corn syrup Salt Total direct materials quantity variance $
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.
Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,300 pounds) has the following standards:
| Standard Quantity | Standard Price | |||
| Whole tomatoes | 3,800 | lbs. | $0.48 | per lb. |
| Vinegar | 210 | gal. | 2.90 | per gal. |
| Corn syrup | 18 | gal. | 10.70 | per gal. |
| Salt | 84 | 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:
| 4,000 lbs. of tomatoes |
| 202 gal. of vinegar |
| 19 gal. of corn syrup |
| 83 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 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 | $ | |
| Vinegar | ||
| Corn syrup | ||
| Salt | ||
| Total direct materials quantity variance | $ |
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