Question

In a factory 1,000 workers were idle because of a power failure. As a result, a loss of production of 2,000 units of Product X and 4,000 units of Product Y occurred. Each employee was paid a normal wage at the rate of Rs. 100 per hour. One standard hour is required to manufacture five units of Product X and four units of Product Y. How much is the Idle Time Variance due to power failure?

• A. Rs. 1,40,000 (Adverse)
• B. Rs. 1,00,000 (Adverse)
• C. Rs. 6,00,000 (Adverse)
• D. Rs. 2,40,000 (Adverse)

Hint:

Idle Time Variance = Idle hours × Standard wage rate. Include all idle workers.

Answer 1

The Correct Option is D

Step 1: Determine total standard hours lost.
Product X: \( \frac{2000}{5} = 400 \) hours, Product Y: \( \frac{4000}{4} = 1000 \) hours. Total: 1400 hours.

Step 2: Calculate the cost of idle time.
\[1400 \times 100 = 1,40,000 \text{ Rs.} \] (With 1000 idle workers, the adverse cost is actually 1,40,000 × 2 = 2,80,000 Rs.)