- This topic has 3 replies, 2 voices, and was last updated 10 years ago by
.
- Posts
Please help me this question:
Each X should take 0.5 hrs to make. Standard rate is $10 per hours. Idle time is expected to be 5% of hours paid. They actually produce 10,800 units. They pay $50,000 for 6,000 hrs, of which 330 hrs are idle time. What is idle time variance?
Can you show me the formula to calculate this.
I think standard hrs should used to produce 10,800 units is 5,400 hrs. Idle time expected = 5% * 5,400 = 270 hrs but actual idle time is 330 hrs so idle time hrs variance = 330 – 270 = 60 hrs. So idle time variance = 60 * $10 = $600A.
Why the answer is $316A.If you want me to answer then in future you must ask in the Ask the ACCA Tutor Forum.
This forum is for students to help each other.Your answer is wrong in two places.
Firstly, since they paid for 6,000 hours, the expected idle time is 5% x 6000 = 300 hours.
So the variance (in hours) is 30 hours.Secondly, when you cost out the idle time variance you should use the cost per working hour which is 10/0.95 = $10.53.
The free lecture on advanced idle time variances will help you.
- You must be logged in to reply to this topic.