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Hi Sir,
THe following question is frm BPP Revision kit:budgeted production
product units stnd machine hrs Actual production unit
w 15000 3000 12000
x 20000 8000 25000
y 14000 7000 16000
z 6000 9000 5000total machine hrs worked in the period amounted to 29000 hrs.
what was the efficiency ratio ??
answer given is 96.2%
Please can you explain how to get the answer ?
Thank you !!!You need to calculate how many hours the actual production should have taken.
So….for W, each unit should take 3000/15000 = 0.2 hours. So the actual production should have taken 12,000 x 0.2 = 2,400 hours.
If you do the same for each product and add them up, then total hours (standard hours for actual production) comes to 27,900 hours.
The actual took 29,000 hours.
So the efficiency ratio is 27,900 / 29,000 = 96.2%
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