Standard

Performance goals, often relating to how much a product should cost.

Product Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,000 pounds) has the following standards:

	Standard Quantity		Standard Price
Whole tomatoes	3,300	lbs.	$ 0.39	per lb.
Vinegar	190	gal.	2.4	per gal.
Corn syrup	16	gal.	8.7	per gal.
Salt	76	lbs.	2.2	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:

3,400 lbs. of tomatoes

182 gal. of vinegar

17 gal. of corn syrup

75 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	$1,287
Vinegar	$456
Corn syrup	$139.2
Salt	$167.2
Total	$2049.4
Standard unit materials cost per pound	$_______

b. Determine the direct materials quantity variance for batch K-54. 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	$______________	Unfavorable
Vinegar	$______________	Favorable
Corn syrup	$_____________	Unfavorable
Salt	$______________	Favorable
Total direct materials quantity variance	$_______________	Unfavorable