CMA Intermediate · Cost Accounting · Employee Costs
In Mehta Textiles, 50 workers each are paid for 48 hours in a week. Of the paid hours, 240 hours were lost due to a machine breakdown (normal idle time is nil) and the wage rate is Rs 100 per hour. What is the cost of abnormal idle time for the week?
The abnormal idle time cost is Rs 24,000, calculated as 240 idle hours multiplied by the wage rate of Rs 100 per hour. Since the breakdown is abnormal and normal idle time is nil, this amount is written off to the Costing Profit and Loss Account rather than loaded on production.
- ARs 24,000Correct
- BRs 2,40,000
- CRs 2,16,000
- DRs 4,80,000
Explanation
Idle hours lost = 240 hours in total. Cost = 240 x Rs 100 = Rs 24,000. The machine breakdown is abnormal idle time, so it is charged to the Costing Profit and Loss Account, not to production. Rs 2,40,000 results from multiplying by 1,000 wrongly; Rs 4,80,000 uses 48 x 100 x 100.
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