What is the idle time variance calculated against?

The idle time variance is calculated against actual hours paid compared to standard rate because this provides a clear measure of the cost impact of any downtime or inefficiencies in labor management. This variance helps in determining how much of the actual labor cost was incurred due to idle time when workers are being paid but not contributing to productive work.

By comparing the actual hours paid to the standard rate, management can ascertain the financial effect of inefficiencies, whether they stem from machine breakdowns, lack of materials, or other disruptions. The idle time variance helps in identifying areas where productivity could be improved, thus allowing management to take corrective actions to minimize such variances in the future.

In contrast, calculating against standard hours for planned production or actual hours worked by employees does not focus on the cost implications of idle time directly. Additionally, the difference between budgeted and actual labor costs encompasses a broader scope than specifically addressing idle time, which limits its effectiveness as a measure for evaluating the efficiency of labor usage.