Dear Mr Moffat
I would like to ask you for help. If your maximum production capacity is let’s say 1000 units per mont and you produce 800 units this means your idle capacity is 200 units. You should treat idle capacity as period cost and charge it to expense in period when incurred rather than allocating its cost to inventory. Which of your videos discusses the problem of idle production capacity? Do you talk about this issue in F5 or F2 videos ?
Ask the Tutor ACCA MA
idle production capacity
7y ago#1Idle capacity is not a cost unless you are paying for it!
Idle time in general is relevant in several topics, mainly in Paper PM (it is no longer called F5) - for example, throughput accounting and especially advanced idle time variances.
The free lectures for both Paper F2 and for Paper FM are complete free courses and cover everything needed to be able to pass the relevant exams well.
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