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There is one thing i could not understand on the idle time..
First to calculate the labour rate variance why it has taken 15800 hours multiply by $18 which is $ 284400 and then it is compared to $ 303360 where there is an adverse of $ 18960… ?
The $303360 is the amount paid for the 15800 hours (which include idle time) BUT why the should pay is not calculated 15800 x $20 where the $ 20 includes idle time making more sense of comparing like with like?
The $18 does not reflect idle time but the $ 303360 includes idle time.
For the rate of pay variance you compare the actual pay with the actual hours worked at the actual rate of pay (which is $18 per hour).
Whether or not there is idle time is only relevant when calculating the idle time variance and the efficiency variance – all the rate of pay variance is checking is whether or not they are paying at the right rate of pay per hour.
I do suggest that you watch my free lectures on advanced idle time variances. The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
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