Question

Kingbird Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch. 3,360 ounces of grape concentrate at $0.02 per ounce 54 pounds of granulated sugar at $0.55 per pound 60 lemons at $0.90 each 150 yeast tablets at $0.26 each 250 nutrient tablets at $0.14 each 2,400 ounces of water at $0.005 per ounce Kingbird estimates that 4% of the grape concentrate is wasted, 10% of the sugar is lost, and 25% of the lemons cannot be used. Compute the standard cost of the ingredients for one gallon of wine. (Round intermediate calculations and final answer to 2 decimal places, e.g. 1.25.)

Answer 1

$5.272

Explanation:

The computation of the standard cost of the ingredients for one gallon of wine is shown below:-

But before that we need to do the following calculations

3,360 ounces of grape concentrate at $0.02 per ounce is (Considering 4%)

= 3,360 × $0.02 ÷ 96%

= $70

54 pounds of granulated sugar at $0.55 per pound is (Considering 10%)

= 54 × $0.55 ÷ 90%

= $33

60 lemons at $0.90 each is (Considering 25%)

= 60 × $0.90 ÷ 75%

= $72

150 yeast tablets at $0.26 each is

= 160 × $0.26

= $41.6

250 nutrient tablets at $0.14 each is

= 250 × $0.14

= $35

2,400 ounces of water at $0.005 per ounce is

= 2,400 × $0.005

= $12

Therefore 50 gallon cost is = $70 + $33 + $72 + $41.6 + $35 + $12

= $263.6

So, cost per gallon = $263.6 ÷ 50

= $5.272