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Saturday, May 10, 2014

Idle Time and Its Treatment

Idle Time – Meaning, Types and Treatment
Idle time refers to the labour time paid for but not utilized on production. It, in fact, represents the time for which wages are paid, but during which no output is given out by the workers. This is the period during which workers remain idle.
Types of Idle Time:
a. Normal idle time is inherent in any job situation and thus it cannot be eliminated or reduced. For example: time gap between the finishing of one job and the starting of another; time lost due to fatigue etc. The cost of normal idle time should be charged to the cost of production. This may be done by inflating the labour rate. It may be transferred to factory overheads for absorption, by adopting a factory overhead absorption rate.
b. Abnormal idle time is defined as the idle time which arises on account of abnormal causes; e.g. strikes; lockouts; floods; major breakdown of machinery; fire etc. Such an idle time is uncontrollable. The cost of abnormal idle time due to any reason should be charged to Costing Profit & Loss Account.
Reasons for idle time: According to reasons, idle time can be classified into normal idle time and abnormal idle time.  Normal idle time is the time which cannot be avoided or reduced in the normal course of business.
1.       The main reasons for the occurrence of normal idle time are as follows:

2.       Time taken by workers to travel the distance between the main gate of factory and the place of their work.
3.       Time lost between the finish of one job and starting of next job.
4.       Time spent to overcome fatigue.
5.       Time spent to meet their personal needs like taking lunch, tea etc.
The main reasons for the occurrence of abnormal idle time are:
1.       Due to machine break downs, power failure, non-availability of raw materials, tools or waiting for jobs due to defective planning.
2.       Due to conscious management policy decision to stop work for some time.
3.       In the case of seasonal goods producing units, it may not be possible for them to produce evenly throughout the year. Such a factor too results in the generation of abnormal idle time.
Control of Idle Time
Following steps are suggested to control idle time:
i) Vigilance must be exercised to control and eliminate idle time.
ii) The instructions to the workers should be given in advance so that workers need not wait.
iii) Plant and machine should be maintained properly so that their breakdown can be avoided
iv) The causes of the idle time should be found out and the root cause must be removed.
v) Regular and timely supply of raw materials must be made available through a good system of storing materials.