ExpertEasy2 marksShort Answer
ACCA · Question 28 · Standard Costing
A logistics warehouse pays its workers a standard rate of $15 per hour. During the week, workers were paid for 5,000 hours, but due to a conveyor belt breakdown, they only actively worked for 4,800 hours.
Calculate the idle time variance. State your answer as a number followed by 'A' or 'F' (e.g., 3000 A).
A logistics warehouse pays its workers a standard rate of $15 per hour. During the week, workers were paid for 5,000 hours, but due to a conveyor belt breakdown, they only actively worked for 4,800 hours.
Calculate the idle time variance. State your answer as a number followed by 'A' or 'F' (e.g., 3000 A).
How to approach this question
1. Calculate the idle hours (Hours paid - Hours worked). 2. Multiply idle hours by the standard labor rate. Idle time is always adverse.
Full Answer
Idle hours = Hours paid - Hours worked = 5,000 - 4,800 = 200 hours.
Idle time variance = 200 hours × $15/hour = $3,000.
Because idle time represents paid time where no work was done, it is always Adverse.
Common mistakes
Calculating the efficiency variance instead of the idle time variance.
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