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    Solution - 10.49

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    1. The standard costs for three lots of production (N42, N43, N44) total $792,252. 2. There was an unfavorable direct-material purchase price variance of $3,800. Direct-material quantity variances included an unfavorable variance of $220 for lot N42 and a favorable variance of $517 for all lots. 3. For direct labor, lot N42 had a favorable efficiency variance of $588 while lots N43 and N44 had unfavorable variances, resulting in an overall unfavorable total variance of $588. All lots also had unfavorable direct labor rate variances totaling $6

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    Solution - 10.49

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    san
    68 views2 pages
    1. The standard costs for three lots of production (N42, N43, N44) total $792,252. 2. There was an unfavorable direct-material purchase price variance of $3,800. Direct-material quantity variances included an unfavorable variance of $220 for lot N42 and a favorable variance of $517 for all lots. 3. For direct labor, lot N42 had a favorable efficiency variance of $588 while lots N43 and N44 had unfavorable variances, resulting in an overall unfavorable total variance of $588. All lots also had unfavorable direct labor rate variances totaling $6

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    Solution - 10.49 of Managerial accounting

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    1. The standard costs for three lots of production (N42, N43, N44) total $792,252. 2. There was an unfavorable direct-material purchase price variance of $3,800. Direct-material quantity variances included an unfavorable variance of $220 for lot N42 and a favorable variance of $517 for all lots. 3. For direct labor, lot N42 had a favorable efficiency variance of $588 while lots N43 and N44 had unfavorable variances, resulting in an overall unfavorable total variance of $588. All lots also had unfavorable direct labor rate variances totaling $6

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    © All Rights Reserved
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    Download as pdf or txt
    68 views2 pages

    Solution - 10.49

    Uploaded by

    san
    1. The standard costs for three lots of production (N42, N43, N44) total $792,252. 2. There was an unfavorable direct-material purchase price variance of $3,800. Direct-material quantity variances included an unfavorable variance of $220 for lot N42 and a favorable variance of $517 for all lots. 3. For direct labor, lot N42 had a favorable efficiency variance of $588 while lots N43 and N44 had unfavorable variances, resulting in an overall unfavorable total variance of $588. All lots also had unfavorable direct labor rate variances totaling $6

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    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

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