Using the same data, what is the idle time variance?
Answer and explanation
Correct answer: B. £1,350 adverse
- Step 1: Idle hours = 150.
- Step 2: Idle time variance = idle hours × standard rate = 150 × £9.
- Step 3: = £1,350 adverse.
Answer
£1,350 adverse.
Why not the others: £1,350 favourable: Idle time is paid for but does not produce output, so it is always adverse. £450 adverse: This is the efficiency variance. £150 adverse: This is the number of idle hours and has not been valued at the standard rate of £9.
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