   Chapter 13, Problem 13.22E

Chapter
Section
Textbook Problem

Standard product cost, direct materials variance HJ. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (6,000 pounds) has the following standards: The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch H3001 were as follows: a.Determine the standard unit materials cost per pound for a standard batch. b. Determine the total direct materials quantity variance for batch H3001.

To determine

Concept Introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

1. Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:
2.   Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

3. Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:
4.   Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

5. Direct material cost variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:
6.   Direct material cost variance = Direct material rate variance + Direct material usage variance

Requirement-1:

To Calculate:

The Standard unit material cost per pound

Explanation

The Standard unit material cost per pound is calculated as follows:

 Standard Quantity Standard Price Standard Cost per Pound A B C = (A*B)/6000 Whole Tomatoes 7500 $0.40$ 0...
To determine

Concept Introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

1. Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:
2.   Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

3. Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:
4.   Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

5. Direct material cost variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:
6.   Direct material cost variance = Direct material rate variance + Direct material usage variance

Requirement-2:

To Calculate:

The Standard unit material cost per pound

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