Answered: Olympic Foods Company uses a standard…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Olympic Foods Company uses a standard cost system to collect costs related to the production of its tomato flavored cooking sauce. The tomato (materials) standards for each jar of sauce produced are 0.8 kg of tomato at a standard cost of $2.30 per kg. During the month of June, Olympic purchased 75,000 kgs of tomato at a total cost of $171,000. Olympic used 64,000 of these kgs to produce 71,500 jars of tomato sauce. What is Olympic's materials price variance for the month of June?

Use the information given in Question No. 1 to calculate Olympic's materials quantity variance for the month of June.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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