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please I have a multiple choice question.
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 10800 units. They pay $50,000 for 6,000 hours, for which 330 hours are idle. What is the excess idle time variance?
.$3,300 (adverse)
.$3474 (adverse)
.$316 (adverse)
.$300 (adverse)Have you watched the free lecture on idle time variances?
(The answer is C)
Sir
I don’t understand the answer. I went to watch the lecture several times but my answer is not even on the list, here is my answer.paid hours 0.5/0.95= 0.526
worked rate 10 / 0.95 = 10.526
idle time expected = 0.526* 10800*5% = 284 hours
actual idle time = 330 hours—————–
46 hours * 10.526 = $ 482They worked 6,000 hours. Therefore the expected idle time is 5% x 6,000 = 300 hours.
So the excess idle time is 330 – 300 = 30 hours.The pay rate of $10 per hour.
So the work rate is 10/0.95 = $10.526So the variance is 30 x 10.526 = $316
Please I don’t understand why the worked rate is 10/0.95=$10.526? I thought it is 10*0.95=$9.5
Have you watched the free lecture on this?
We pay $10 for every hour.
However, since 5% of the time paid is idle, it means for every hour paid we only get 0.95 hours of work (but are still paying $10).
So if 0.95 hours of work are costing $10, then 1 hour of work is costing 10/0.95 = $10.526.
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