Skip to content

CMA Intermediate · Cost Accounting · Employee Costs

In cost accounting, idle time arising from a normal cause such as time taken for machine warm-up or routine waiting for materials within usual limits is generally treated as:

Normal idle time is unavoidable in regular working, so its cost is treated as part of production cost and absorbed through factory overheads. Only abnormal idle time, caused by exceptional events, is excluded from product costs and written off to the Costing Profit and Loss Account.

  1. AAn abnormal loss charged to the Costing Profit and Loss Account
  2. BPart of the cost of production, absorbed through factory overheadsCorrect
  3. CA direct expense chargeable to a specific job
  4. DA deduction from the wages payable to the workers

Explanation

Normal idle time is unavoidable in the ordinary course of operations, so its cost is included in the cost of production by absorbing it into production overheads. Abnormal idle time, caused by events such as power failure or strikes, is charged to the Costing Profit and Loss Account. Treating normal idle time as an abnormal loss would wrongly keep a necessary production cost out of product costs.

Did you get it right without looking?

One question tells you little. A timed set on Employee Costs shows your real accuracy, how long you take and where you lose marks.

Practise Employee CostsFree diagnostic mock

More Employee Costs questions