Question

Caribou Fruit Drink Company planned to make 200,000 containers of apple juice. It expected to use two cups of frozen apple concentrate to make each container of juice, thus using 400,000 cups of frozen concentrate. The standard price of one cup of apple concentrate is $1.20. Caribou actually paid $499,100 to purchase 402,500 cups of concentrate, which was used to make 201,000 containers of apple juice. Required Compute the actual price per cup of concentrate. (Round your answer to 2 decimal places.) Compute the standard quantity (number of cups of concentrate) required to produce the containers. Compute the materials price variance and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) Compute the materials usage variance and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

Answer 1

Answer:

(a) $1.24 per cup

(b) 402,000 cups

(c) 16,100 Unfavorable

(d) 600 Unfavorable

Explanation:

(a) Actual price per cup of concentrate:

= Amount paid to purchase cups ÷ No. of cups

= $499,100 ÷ 402,500

= $1.24 per cup

(b) Standard quantity:

= Containers of apple juice × Two cups of frozen apple concentrate

= 201,000 × 2

= 402,000 cups

(c) Total Price Variance:

= (standard price of one cup of apple concentrate - Actual price per cup of concentrate) × No. of cups

= (1.2 - 1.24) × 402,500

= 16,100 Unfavorable

(d) Material usage variance:

= (Standard quantity - No. of cups) × standard price of one cup of apple concentrate

= (402,000 - 402,500) × 1.2

= 600 Unfavorable