EXPLAIN how would you treat the idle capacity costs in Cost Accounts.

(a) Idle capacity costs can be treated in product costing, in the following ways: (a) If the idle capacity cost is due to unavoidable reasons such as repairs, maintenance, changeover of job etc., a supplementary overhead rate may be used to recover the idle capacity cost. In this case, the costs are charged to the production capacity utilised. (b) If the idle capacity cost is due to avoidable reasons such as faulty planning, power failure etc.; the cost should be charged to costing profit and loss account. (c) If the idle capacity cost is due to seasonal factors, then, the cost should be charged to the cost of production by inflating overhead rates.