Idle time variance is . . . . . . . .

Idle time × actual labour
Idle time × standard rate
Idle time × budgeted labour rate
Idle time × historical cost

The correct answer is: C. Idle time × budgeted labour rate.

Idle time variance is the difference between the actual idle time and the budgeted idle time, multiplied by the budgeted labor rate. It is a measure of how well the company is managing its labor costs. A positive idle time variance indicates that the company is using more idle time than it budgeted for, which could be due to inefficiencies or poor planning. A negative idle time variance indicates that the company is using less idle time than it budgeted for, which could be due to improved efficiency or better planning.

Option A is incorrect because it multiplies idle time by the actual labor rate, which would not take into account the budgeted labor rate. Option B is incorrect because it multiplies idle time by the standard rate, which is not the same as the budgeted labor rate. Option D is incorrect because it multiplies idle time by the historical cost, which is not relevant to the budgeted labor rate.

Exit mobile version