Hank 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.
3,920 ounces of grape concentrate at $0.01 per ounce
54 pounds of granulated sugar at $0.55 per pound
60 lemons at $0.70 each
50 yeast tablets at $0.21 each
250 nutrient tablets at $0.11 each
1,600 ounces of water at $0.005 per ounce
Hank estimates that 2% of the grape concentrate is wasted, 10% of the sugar is lost, and 25% of the lemons cannot be used.
Required:
1. Compute the standard cost of the ingredients for one gallon of wine. (Carry computations to two decimal places.) (Round unit costs to 2 decimal places, e.g. 2.75.)

Total Standard Cost = Standard Cost for Grape + Standard Cost for Sugar + Standard Cost for Lemon + Standard Cost for Yeast Tablets + Standard Cost for Nutrient Tablets + Standard Cost for Water

Standard cost of the ingredients for one gallon of wine

Grape = $40.00 [(3,920 / 0.98) x $0.01]

Sugar = $33.00 [(54 / 0.90) x $0.55]

Lemon = $ 56.00 [(60/ 0.75) x $0.70 ]

Yeast Tablets = $10.50 [50 x $0.21]

Nutrient Tablets = $27.50 [250 x $0.11]

Water = $8.00 [1,600 x $0.005]

Total Standard Cost = $40.00 + $33.00 + $56.00 + $10.50 + $27.50 + $8.00

Total Standard Cost = $175.00

Required Production = 50 Gallon batch.

The Standard cost per gallon = Total Standard Cost / Required Production

The Standard cost per gallon = $175.00 / 50 Gallon Batches

The Standard cost per gallon = $3.50 per gallon batch

The Standard Cost Per Gallon is $3.50