idle time & variances

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    gutsychyk
    Participant

    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
    Keymaster

    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
    Participant

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


    Profile photo of John Moffat
    John Moffat
    Keymaster

    You are welcome.

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