SOLUTION: 10-49

1. Standard cost of lots N42, N43, and N44:

METRO FASHIONS, INC.

STANDARD COST OF PRODUCTION
FOR NOVEMBER
Standard Total
Quantity Cost per Standard
Lot (boxes) Box Cost
N42.................................................................. 2,000 $106.50 $213,000
N43.................................................................. 3,400 106.50 362,100
N44.................................................................. 2,400 90.48* 217,152
Standard cost of production $792,252

*Standard material cost plus 80 percent of standard cost of labor and overhead:
$26.40 + (80%)($44.10 + $36.00).

2. Variances (U denotes unfavorable; F denotes favorable):

a. METRO FASHIONS, INC.

DIRECT-MATERIAL PURCHASE PRICE VARIANCE
FOR NOVEMBER

Actual cost of materials purchased .......................................................... $212,800

Standard cost of materials purchased
(190,000  $1.10) ..................................................................................... 209,000
Direct-material purchase price variance................................................... $ 3,800 U

b. METRO FASHIONS, INC.

DIRECT-MATERIAL QUANTITY VARIANCES
FOR NOVEMBER
Lot no.
N42 N43 N44 Total
Direct-material quantity
variance:
Standard yards:
Boxes in lot ........................... 2,000 3,400 2,400 7,800
Standard yards
per box ............................  24  24  24  24
Total standard
quantity ........................... 48,000 81,600 57,600 187,200
Actual yards used .................... 48,200 80,880 57,650 186,730
 Variance in yards* ....................... 200 (720) 50 (470)
Standard price ............................. $1.10  $1.10 $1.10  $1.10
Direct-material
quantity variance .................. $ 220 U $ (792) F $55.00 U $(517.00) F

*Parentheses denote favorable variance.Case 10-49 (Continued)

c. and d.

METRO FASHIONS, INC.

DIRECT-LABOR VARIANCES
FOR NOVEMBER
Lot no.
N42 N43 N44 Total
Direct-labor efficiency variance:
Standard hours:
Boxes in lot ........................... 2,000 3,400 2,400
Standard hours
per box .........................  3  3  3
Total ...................................... 6,000 10,200 7,200
Percentage of completion ...  100%  100%  80%
Total standard hours............ 6,000 10,200 5,760 21,960
Actual hours worked ............ 5,960 10,260 5,780 22,000
Variance in hours* .................... (40) 60 20 40
Standard rate............................ $14.70 $14.70 $14.70 $14.70
Direct-labor
efficiency variance ........... $ (588) F $882 U $294 U $588 U

Lot no.
N42 N43 N44 Total
Direct-labor rate variance:
Actual hours worked............. 5,960 10,260 5,780 22,000
Rate paid in excess of standard
($15.00 – $14.70) ............... $ .30 $ .30 $ .30 $ .30
Variance .................................... $1,788 U $3,078 U $1,734 U $6,600 U