H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (1,880 pounds)

H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (1,880 pounds) has the following standards:

                   Standard Quantity | Standard price
Whole tomatoes      3,360 lbs. | $ 0.50 per lb.
Vinegar                      220 gal. | 3.00 per gal.
Corn syrup                   20 gal. | 12.00 per gal.
Salt                               80 lbs. | 3.00 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-54 were as follows:

3,556 lbs. of tomatoes
  230 gal. of vinegar
   18 gal. of corn syrup
   75 lbs. 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-54.

Answer:


a. 
Standard 
Quantity × 
Standard 
Price = 
Standard 
Cost per 
Batch 
Whole tomatoes……… 3,360 lbs. $  0.50 per lb. $1,680 
Vinegar………………… 220 gal. 3.00 per gal. 660 
Corn syrup…………… 20 gal. 12.00 per gal. 240 
Salt…………………… 80 lbs. 3.00 per lb.   240 
   $2,820 
÷ Pounds per batch……………………………………………   1,880  lbs. 
$  1.50  per lb. 
b. Actual 
Quantity for 
Batch K-54 

– 
Standard 
Quantity per 
Batch 

= 

Quantity 
Difference 

× 

Standard 
Price 

= 
Materials 
Quantity 
Variance 
3,556 lbs. 
230 gal. 
18 gal. 
75 lbs. 
 3,360 lbs. 
220 gal. 
20 gal. 
80 lbs. 
 196 lbs. 
10 gal. 
(2) gal. 
(5) lbs. 
 $  0.50 per lb. 
3.00 per gal. 
12.00 per gal. 
3.00 per lb. 
 $98 U 
30 U 
–24 F 
–15 F 
        $89 U