Vanderhaus Corporation manufactures a variety of liquid lawn fertilizers, including a very popular product called Lush 'N Green. Data about Lush 'N Green and Proctol, a major ingredient, follow.
Expected operations:
• Proctol is purchased in 55-gallon drums at a cost of $65 per drum. A 2% cash discount is offered by Proctol's manufacturer for prompt payment of invoices, and Vanderhaus takes advantage of all discounts offered.
• Vanderhaus normally purchases 200 drums of Proctol at a time, paying shipping fees of $2,660 per shipment.
• Each gallon of Lush 'N Green requires three quarts of Proctol; however, because of evaporation and spills, Vanderhaus loses 4% of all Proctol that enters production. (Recall that there are four quarts in a gallon.)
Actual operations:
• For the period just ended, Vanderhaus purchased 1,500 drums of Proctol at a total cost of $118,100, which reflects discounts and shipping. There was no beginning inventory, but an end-of-period inventory revealed that 30 drums were still on hand.
• Manufacturing activity output totaled 104,000 gallons of Lush 'N Green.
Assume that the company computes variances at the earliest point in time.
Required:
A. Compute the standard purchase price for one gallon of Proctol.
B. Compute the standard quantity of Proctol to be used in producing one gallon of Lush 'N Green. Express your answer in quarts.
C. Compute the direct-material price variance for Proctol.
D. How much Proctol was used in manufacturing activity and how much should have been used? Express your answer in quarts.

Question

Quizplus · Accepted Answer

The Answer of Vanderhaus Corporation manufactures a variety of liquid lawn fertilizers, including a very popular product called Lush 'N Green. Data about Lush 'N Green and Proctol, a major ingredient, follow.
Expected operations:
• Proctol is purchased in 55-gallon drums at a cost of $65 per drum. A 2% cash discount is offered by Proctol's manufacturer for prompt payment of invoices, and Vanderhaus takes advantage of all discounts offered.
• Vanderhaus normally purchases 200 drums of Proctol at a time, paying shipping fees of $2,660 per shipment.
• Each gallon of Lush 'N Green requires three quarts of Proctol; however, because of evaporation and spills, Vanderhaus loses 4% of all Proctol that enters production. (Recall that there are four quarts in a gallon.)
Actual operations:
• For the period just ended, Vanderhaus purchased 1,500 drums of Proctol at a total cost of $118,100, which reflects discounts and shipping. There was no beginning inventory, but an end-of-period inventory revealed that 30 drums were still on hand.
• Manufacturing activity output totaled 104,000 gallons of Lush 'N Green.
Assume that the company computes variances at the earliest point in time.
Required:
A. Compute the standard purchase price for one gallon of Proctol.
B. Compute the standard quantity of Proctol to be used in producing one gallon of Lush 'N Green. Express your answer in quarts.
C. Compute the direct-material price variance for Proctol.
D. How much Proctol was used in manufacturing activity and how much should have been used? Express your answer in quarts.

Vanderhaus Corporation Manufactures a Variety of Liquid Lawn Fertilizers, Including