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Dear John,
Please be kind enough to explain the steps on How I can arrive at the “Expected/Standard Hours To Make Output” in order to calculate the Labor Efficiency from the details provided below.
A company records the following information concerning a product:
Standard time allowed per unit 6 minutes
Actual output in period 720 units
Actual hours worked 180
Budgeted hours 185What is the labour efficiency ratio?
a. 93.75%
b. 97.3%
c. 102.5%
d. 106.7% ?Thank You!
If the standard time is 6 minutes, then the standard time to make 720 units is 720 x 6/60 = 72 hours.
(The rest of the question and the choices of answers makes me think that either there is a typing error in the question (or you have mistyped something) or that the question actually asked for the capacity ratio and not the efficiency ratio.)
Thank You for your response,
I think the publisher has made an error in the question, I copy pasted (Ctrl c+v) it right from the digital copy.
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