Question:
H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (1,500 pounds) has the following standards:
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Standard Quantity
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Standard Price
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Whole tomatoes
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2,400 pounds
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$0.40 per pound
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Vinegar
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130 gallons
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2.50 per gallon
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Corn syrup
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10 gallons
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8.00 per gallon
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Salt
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54 pounds
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2.50 per pound
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The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch W196 were as follows:
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2,500
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pounds of tomatoes
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115
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gallons of vinegar
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13
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gallons of corn syrup
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53
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pounds of salt
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a. Determine the standard unit materials cost per pound for a standard batch.
b. Determine the direct materials quantity variance for batch W196.