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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 produced 10800 units. They paid $50000 for 6000 hours of which 330 hours are idle.
What is the excess idle time variance?
MY ANS IS $300 . CORRECT ANS IS $316.
I NEED THE WORKINGS PLEASEPlease don’t type in capitals.
You obviously have not watched our free lectures on this – our lectures are a complete course for Paper F5 and cover everything needed to be able to pass the exam well.
The actual idle time = 330.
The standard idle time = 5% x 6,000 = 300.
So the excess is 30 hours.The rate of pay is $10 per hour, but they will only work 0.95 hours, so the rate per working hour is 10/0.95 = 10.526. So the variance is 300 x 10.526 = 316.
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