How Should Idle Time Be Accounted For

question 13

Multiple Choice

How should idle time be accounted for?

• A)It should be recorded along with the reason for it,and charged to Factory Overhead.
• B)It should be charged to the job from which the employee took a break.
• C)It should be documented and the employee should not be paid for that time.
• D)It should be allocated to the various manufacturing departments and the supervisors should decide how to handle it.

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Definitions:

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and loan payments, remaining constant regardless of business activity levels.

Total Revenue

The total amount of money a firm receives by selling goods or services, calculated as the unit price times the quantity sold.

Maximizing Profits

The process or strategy of adjusting the production and sale of goods and services to achieve the highest possible profit.

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, or insurance expenses.