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Standard Price, Standard Quantity, and Variances

Fruit Snacks Corp Inc. makes lunchbox style fruit snacks. The owner of the company is setting up a standard cost system, and she has collected the following data for one of the company's products fruit chews.

The data below pertain only to the fruits used in the product:

Material requirements, kilograms of fruits per dozen bags 0.95 kilograms Allowance for waste, kilograms of fruits per dozen bags 0.06 kilograms
Allowance for rejects, kilograms of fruits per dozen bags 0.04 kilogramS
Purchase price, fruit $7.50 per kilogram Purchase discount 4% of purchase price
Shipping cost from the supplier $0.30 per kilogram Receiving and handling cost $0.10 per kilogram

a. Determine the standard price of a kilogram fruits. Show computations.
b. Determine the standard quantity of fruits for one dozen bags. Show computations.

Posters Now uses a standard cost system. Job 67 is for the manufacturing of 800 units of the product P100. The company's standards for one unit of product P100 are as follows:

Standard quantity: 11 Ounces
Standard price: $3 per ounce
Standard direct labor: 1.5 hours
Standard Labor rate: $12 per hour

The job required 8,000 ounces of raw material costing $26,100.

a. What is the materials price variance? Show computations.
b. What is the materials quantity variance? Show computations.

Solution Preview

Fruit Snacks Corp. Inc.
Requirement A
Standard price of fruit per kilogram = $7.50 - $7.50*4% + $0.30 + $0.10 = $7.60

Requirement B
Standard quantity of fruits per one dozen bags ...

Solution Summary

The solution determines Fruit Snacks Corp. cost system's standard price, standard quantity and variances.