- That part of practical activity which cannot be utilized and beyond management control
- Mainly due to lack of demand, non-availability of materials, shortage of labour, seasonal nature of product and lower sales expectancy
- Idle capacity is the difference between the practical capacity and the capacity based on sales expectancy. It is therefore the unused capacity of a plant equipment or department which cannot be used in an alternative manner.
- Normally associated with cost of fixed nature like rent, rate, depreciation, repairs and maintenance, insurance premium, management supervisory costs which cannot be absorbed or recovered due to under-utilization of plant capacity