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

Which of the following is an example of idle time in employee cost accounting?

Time lost because of a power failure is idle time, since workers are paid but cannot produce anything. Rework, machine set-up and overtime all involve work actually being done, so they are not idle time.

  1. ATime lost by workers because of a power failure at the factoryCorrect
  2. BTime spent by workers on rework of defective units caused by poor workmanship
  3. CTime spent by a machine operator in setting up the machine for a new job
  4. DOvertime put in by workers to complete a rush order

Explanation

Idle time is paid time during which workers produce nothing because of causes such as power failure, machine breakdown or waiting for material. Rework time is a cost of abnormal or normal spoilage and rework, not idle time. Set-up time is productive preparatory work and overtime is extra hours worked, so neither is idle time.

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