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CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses

In a cost accounting context, which one of the following is classified as 'idle time' of a worker?

Time lost due to a power failure for which wages are still paid is idle time. Idle time is paid but unproductive time arising from causes like breakdown or power failure. Rework, overtime and set-up are different cost concepts, so they are not idle time.

  1. ATime lost because of a power failure for which the factory is paid wagesCorrect
  2. BTime spent by a worker on rework of defective units made earlier by him
  3. COvertime hours worked beyond the normal shift
  4. DTime spent by a worker on setting up a machine before production starts

Explanation

Idle time is paid time during which no production happens because of causes such as power failure, machine breakdown or waiting for material. Rework time is abnormal or normal loss of effort, overtime is premium related, and set-up time is productive preparation time chargeable to production or overheads.

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