Learning Materials For Accounting, Management , Finance And Economics.

Wednesday, February 16, 2011

Concept And Formula Of Labor Idle Time Variance(LITV)

Labor idle time variance, which is also known as sub-efficiency variance, indicates the standard cost of the actual hours for which the employees may remain idle due to abnormal circumstances like strikes, lockouts, power failure, breakdown of machinery, unavailability of raw materials, transportation strike, and so on. The idle time variance is always unfavorable. For the accurate calculation of the labor efficiency variance, labor idle time should be adjusted.

Formula For The Calculation Of Labor Idle Time Variance (LITV)

Labor Idle Time Variance (LITV) = Idle Time x Standard Rate