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

Which one of the following is an example of 'idle time' in the context of employee cost?

A power failure during which workers are paid but cannot produce is idle time. Idle time means paid hours with no output. Rework, overtime payment and productive work all involve production effort or premium payment, so they are not idle time.

  1. ATime lost because of a power failure during which workers are paid but produce nothingCorrect
  2. BTime spent by a worker on rework of defective units
  3. COvertime hours paid at double the normal rate
  4. DTime spent by a skilled worker on productive jobs

Explanation

Idle time is paid time during which workers produce nothing, for example because of a power failure or machine breakdown. Rework time is productive time spent correcting defects and is treated as abnormal or normal rework cost, not idle time. Overtime is a premium payment and productive working time is the opposite of idle time.

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