Idle time is the concept which is used in the context of cost accounting, idle time is relevant for manufacturing concern because it is that time where though the companies pay to labors or workers but there is no production on the part of workers. Idle time can be of 2 types –
- Normal Idle time – It is that idle time which happen during the normal course of business and therefore it is difficult to stop it, some examples of idle time is when worker goes from one machine to another or when worker goes to washroom and so on. Normal idle time treatment in the books of account is done and they are added to the cost of production and they are part of the factor cost in the books of a accounts.
- Abnormal Idle time – It is that idle which is not normal and it arises due to certain abnormal factors, some examples of abnormal idle time are when there is power failure in the factory, non availability of raw materials leading to stoppage of production, strike by workers and so on. Abnormal idle time is not shown in cost of production in cost account rather it shown as separate item in profit and loss account. Management should take steps to avoid that abnormal idle time which is controllable as some factors are beyond the control and therefore there will be always some abnormal idle time as far as workers are concerned.