ExpertEasy2 marksMultiple Choice
ACCA · Question 25 · Standard Costing
Section A
ServeRight Firm pays its staff for 40 hours a week at a standard rate of $20 per hour. Last week, due to a server outage, staff were idle for 5 hours but were still paid. What is the idle time variance for one staff member for the week?
Section A
ServeRight Firm pays its staff for 40 hours a week at a standard rate of $20 per hour. Last week, due to a server outage, staff were idle for 5 hours but were still paid. What is the idle time variance for one staff member for the week?
Answer options:
A.
$100 Favorable
B.
$100 Adverse
C.
$800 Adverse
D.
$700 Favorable
How to approach this question
Multiply the number of idle hours by the standard hourly rate. Idle time is always adverse.
Full Answer
B.$100 Adverse✓ Correct
Idle time variance is calculated as the idle hours multiplied by the standard labor rate. 5 hours * $20 = $100. Because the company paid for time that produced nothing, it is an Adverse variance.
Common mistakes
Calculating it as favorable, or subtracting it from total pay incorrectly.
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