Answered: Hillview Textiles produces custom woven…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 8EB: Case made 24,500 units during June, using 32,000 direct labor hours. They expected to use 31,450...

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Hillview Textiles produces custom woven rugs. It takes 3.5 hours of direct labor to produce a single rug. Hillview's standard labor cost is $16 per hour. During September, Hillview produced 12,600 units and used 45,800 hours of direct labor at a total cost of $721,200. What is Hillview's labor efficiency variance for September?

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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