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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Standard product cost, direct materials variance

 HJ. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (3,128 pounds) has the following standards;

  Standard Quantity Standard Price
Whole tomatoes 4.000 lb. $ 0.60 per lb.
Vinegar 260 gal. 2.25 per gal.
Corn syrup 25 gal. 28.00 per gal.
Salt 100 lb. 2.25 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:

  4,250 lb. of tomatoes

  275 gal. of vinegar

  22 gal. of corn syrup

  90 lb. of salt

 a.    Determine the standard unit materials cost per pound for a standard batch.

 b.    Determine the direct materials quantity variance for batch K-111, Round your answer to the nearest cent.

a.

To determine

Standard cost:

In the accounting records, the term standard cost refers to the practice of replacement of an expected cost for an actual cost. Then the difference between the expected costs, and actual costs showing the variance are also recorded periodically. A standard costs is also known as target cost or predetermined cost.

To determine: The standard unit materials cost per pound for a standard batch.

Explanation

Determine the standard unit materials cost per pound for a standard batch.

Particulars

Standard Quantity

(a)

Standard Price

(b)

Standard
Cost per
Batch

(c)=(a)×(b)

Whole tomatoes 4,000 lbs. $0.60 per lb. $ 2,400
Vinegar 260 gal. 2.25 per gal. 585
Corn syrup 25 gal. 28.00 per gal. 700
Salt 100 lbs. 2.25 per lb

b.

To determine
The direct materials quantity variance for batch K-111.

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