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To know about idle time in cost accounting is very important for reducing the cost of labor because after increasing idle time, production cost will increase. First of all we understand what is idle time. Taking some rest after hard work in factory is not idle time but waste the time with any production in factory is idle time due to delay of material or any laziness of laborers or any other reasons.  Employer has to pay for this waste time also. So, idle time is loss of business. We can divide idle time into two main parts.

1. Normal Idle Time

This is that waste of time which we can not stop because it is normal and producer has to pay laborers for this idle time. For example :

a) Walking time from one department to other department.

b) Consuming time to start any job in factory.

c) Consuming time for fulfilling personal needs like drinking of water, refreshment and rest.

d) Consuming time to set the machines.

Treatment of the Cost of Normal Idle Time

a) It must be charged as indirect expenses in factory. For example, if a laborer gets Rs. 1 per hr and he spend 8 hrs in factory  and his total wage will be Rs. 8 but he utilized his productive time 7 hrs, then direct labor cost will be 8 hrs X Rs. 1 = Rs. 8 and 1hr will be overhead of idle time and Rs. 1 per hr idle time will be written in factory expenses in cost sheet.

b) We can also increase the cost of labor  rate. with following way

If a labor works for 8 hrs, he gets = Rs. 1 per hr

If a labor works for 7 hrs, he gets = Rs. 1 / 8 X 7 = Rs. 1.14 per hr

Now labor cost will increase by 0.14 paise

2. Abnormal Idle Time

This is that wastage of time which we can stop by good supervision.

a) waste of time due to inefficiency of engineers.

b) Power failure

c) Delay of  supply of material to factory

d) Strike and lockout

Treatment of the cost of Abnormal Idle Time

Wage for abnormal idle time is loss of business and it must be transferred to costing profit and loss account.

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