The time when the worker does no work and remains idle, is the idle time. So the idle time cost represents the wages paid for the time lost. The following are its causes:
- Lack of proper planning:
That the production work should go on smoothly, depends upon proper planning. If the workers do not have material at the right time, or the machines are not kept fir for working, the time goes waste. Sometimes, delay in the proceeding process delays the operations of the succeeding progress. Here also the workers have to wait due to faulty planning or bad management.
- Careless in Supervision:
If the foreman of a department does not take his duty seriously, the labour working under him also becomes careless and spoils time in the idle way.
- Confrontation between labour management:
The confrontation between labour and management arising form any cause, does waste time in discussions, dialogues, strikes etc., and the wages paid, if any, for this period form the idle time cost.
- Economic Factors:
Trade depression, or serve competition lowers the production, and so labour remains effectively unutilized.
- Others reasons:
The electricity may fail or the machine may break down for some or more time. They make labour to remain idle for the time being.
Idle time does not limit itself in its effect to the wages paid for the time but his wider implications. The plant, machines, equipments, and other accessories also become idle during that period, and the fixed cost continues to be incurred. As such, idle time need be reduced as far as possible.
Idle-time cost can be divided into two types:
(i) Normal, and
Normal idle-time can be further divided into
a) Controllable, and
Normal idle-time is one which is incidental to production. The cost of normal and controllable idle time should be charged as an overhead expense to the production. If the responsibility for this type of idle-time can be fixed upon a particular department, the cost should be charged to the overheads of that department and absorbed in the production cost of that department.