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this is a question from opentution mcq test
Y plc produces widgets.
Each widget should take 0.5 hours to make. The standard rate of pay is $10 per hour. Idle time is expected to be 5% of hours paid.They actually produce 10,800 units. They pay $50,000 for 6,000 hours, of which 330 hours are idle.
What is the excess idle time variance?
Answer : 316 adverse
why is the answer not 3300(A) ?
Why should it be 3,300 (A)??
It seems that you have not watched the lecture on advance idle time variances!
The standard idle time is 6,000 x 5% = 300. The actual idle time is 330. Therefore they were idle for 30 hours more than they should have been.
The standard rate of pay is $10 per hour. Therefore the standard cost per working hour is 10/0.95 = $10.53 per hour.
Therefore the variance is 30 x $10.53 = $316.
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