Cost of production and worker's idle time

It is important to record cost data, analyse them and prepare proper cost records. Workers time on production should be analysed and proper cost should be identified.
Time keeping should be distinguished from time booking. While time keeping is the recording of attendance time or gate time, time booking is the recording of time spent on a job or process and is also known as work time or activity time.
Every worker engaged on a job or activity of direct nature, must allocate his time to jobs, products, service or some other cost units which should still be job or operation, while indirect workers are engaged on work of indirect nature such as supervision cleaning, maintenance, etc. Sometimes, even a diret worker may be engaged on work of indirect nature for a part of the work. There may also be occasions when a direct worker is unable to do any work at all because he is waiting for materials or instructions. In any case, the whole of a direct worker’s time should be analysed. This is done by time booking or recording activity time.

OBJECTS OF TIME BOOKING
The various objects of time booking are :
a) Ascertainment and Allocation of labour cost.
In order to arrive at the true cost of products or jobs, it is necessary to ascertain the labour time spent on it and evaluate in terms of money. Labour time in terms of money is the labour cost of the job or product.
b) Proper Utilisation of Attendance Time.
Since workers are paid on the basis of clock time, the employer is interested in knowing whether the whole of attendance time is utilised for a job or product. In other words, attendance time should be equal to activity time as otherwise, the employer stands to lose since he is paying for the time not utilized on production.
c) Ascertainment of idle Time.
In practice, time clocked will seldom be equal to the time spent on production. The difference between the two is known as idle time. While idle time usually occurs for various reasons, the management is interested not merely in its ascertainment but control also. Time booking helps in the ascertainment of idle time and its control.
d) Apportionment of Overhead.
Activity time, or time spent on production in terms of labour hours, is one of the methods of approtioning factory overheads amongst jobs or departments. Time booking facilitates computation of overhead rates on the basis of labour hours.
e) Introduction of Incentive Wage Schemes.
Time booking becomes necessary for computing wages for the time taken and bonus for the time saved under the incentive systems of wage payment.
f) Comparison of Labour Cost
For cost control and cost reduction, every employer would like to study the incidence of wages on the cost of jobs. Similarly, for evaluation of labour performance, actual labour time may be compared with the standard or the budgeted time.
IDLE TIME
Idle time is that time for which the worker has been paid without giving any production to the employer. For example, if a worker is supposed to work for eight hours in the factory, but his job card shows only seven hours spent on jobs, one hour will be the idle time in such a case.
Causes of Idle Time :
For effective control over labour costs, it is necessary for the management to identify the reasons for the idle time. Idle time usually arises due to
i) Normal causes
ii) Abnormal causes
i) Nromal causes:

Whatever precautions may be taken, some idle time is unaviodable. Normal causes for which idle time arises are
a) Time lost between factory gate and place of work.
b) Time taken in picking up the work for the day.
c) The interval between completion of one job and commencement of another job.
d) Time taken for personal needs and tea breaks.
e) Time taken for maintenance of machines.
II) Abnormal Causes:
Idle time may also arise due to some abnormal factors which can be avoided if proper precautions are taken. The abnormal causes are :
a) Power failure,
b) Breakdown of machinery
c) Non-availability of Raw materials
d) Waiting for instructions.
e) Strikes, lock-outs, floods, fire etc.
Treatment of idle time cost :
The treatment of idle time in cost accounting depends on the nature of idle time.
Treatment of normal idle time costs can be made in the following two ways in the cost accounting :
a) The labour cost of normal idle time can be treated as a part of the cost of production. Normal idle time cost of direct workers is treated as direct wages.
b) The entire normal idle time cost can be treated as an item of factory expenses and can be recovered as indirect charges. For example, if a worker is engaged for eight hours in a factory @ Rs.50 per hour and out of this eight hours, two hours are the normal idle time, Rs.100/- (Rs.50 x 2) which is normal idle time cost, is treated as factory expenses, Rs. 300 is treated as direct wages. But in the first method, normal idle time cost Rs.100 was treated as direct wages.
Treatment of Abnormal idle Time Cost :
Abnormal idle time costs do not form a part of cost of production. It can be treated in the following two ways:
a) The abnormal idle time cost can be treated as an item of factory expenses.
b) The abnormal idle time costs are transferred to the Costing Profit and Loss Account. In this method abnormal idle time costs are not treated as a cost but treated as a loss.
The choice of the method of treatment of idle time depends much on the policy of the Management.