idle time & variances

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    gutsychyk
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    quick question
    consider total time spent on a job 8500
    however 500 was idle time
    so when we calculate variances
    Labour rate = take 8500
    labour efficiency = take 8000
    idle = 500 x st rate
    variable oH =do we calculate on 8500 or 8000
    fixed oh= do we calculate on 8500 or 8000
    thanks


    Profile photo of John Moffat
    John Moffat
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    For variable overheads and fixed overheads capacity and efficiency variances, you use the actual hours worked (8000). Idle hours paid are irrelevant for overhead variances – we assume that no overheads are incurred during idle hours.


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    gutsychyk
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    many thanks…thts wht i needed. quick answers for my all little little questions. thanksalot again


    Profile photo of John Moffat
    John Moffat
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    You are welcome.

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