The capacity ratio is actual hours worked divided by the budgeted hours. The number of units is not relevant for the capacity ratio which is simply measuring whether more or less hours were available in total.

I do suggest that you watch my free lectures on this which go through each of the labour ratios. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

On question 3 about labour capacity, the solution says 11,000(actual)/8,000(budgeted) = 137.5% but the 8,000 are for 20,000 units while the 11,000 are for 25,000, wouldn’t the solution have to be taking that into consideration?

The question says in one day an employee produced 1200 units in which 32 were rejected. so to calculate total amount that employee produced, you should first eliminate rejected production from the total. This will give you a total of 1168 unite (1200-21=1168). since the company are paying their employees on a piece work basis you have to allocate only the required amount of units for the given schemes. first you need to multiply 500 with 0.5. After that, multiply another 500 with 0.75. These two calculations will bring your total output to 1000 so only 168 units are left to be allocated. So just multiply those remaining 168 units with 1. you will get an answer of 793 (500*0.5+500*0.75+168*1)

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Gachez says

could you explain question 3 because the units where different why wasn’t that factor considered?

John Moffat says

The capacity ratio is actual hours worked divided by the budgeted hours. The number of units is not relevant for the capacity ratio which is simply measuring whether more or less hours were available in total.

I do suggest that you watch my free lectures on this which go through each of the labour ratios. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

mariaboscu says

100%

ursinab says

Hi,

On question 3 about labour capacity, the solution says 11,000(actual)/8,000(budgeted) = 137.5% but the 8,000 are for 20,000 units while the 11,000 are for 25,000, wouldn’t the solution have to be taking that into consideration?

Thanks

alexandrapower says

Please can you explain the labour efficiency question. Why for the standard hours of actual production do we do the sum (25,000/20,000) x 8,000?

John Moffat says

If it makes it more obvious to you, the standard time per unit is 8,000 hours / 20,000 units = 0.4 hours per unit.

Therefore the standard time for the actual production of 25,000 units is 25,000 x 0.4 hours = 10,000 hours.

aftab2628 says

question no1 .calculating how much employer earn per day?

balleith says

yes the question says during one day the employee produced the outputs.

John Moffat says

aftab2628: You will have to say which question you are asking about.

aftab2628 says

CAN YOU PLEASE EXPLAIN WHERE DOES 168 COME FROM ?

mohamed2000 says

The question says in one day an employee produced 1200 units in which 32 were rejected. so to calculate total amount that employee produced, you should first eliminate rejected production from the total. This will give you a total of 1168 unite (1200-21=1168). since the company are paying their employees on a piece work basis you have to allocate only the required amount of units for the given schemes. first you need to multiply 500 with 0.5. After that, multiply another 500 with 0.75. These two calculations will bring your total output to 1000 so only 168 units are left to be allocated. So just multiply those remaining 168 units with 1. you will get an answer of 793 (500*0.5+500*0.75+168*1)

heshepem says

thumbs up Mohamed200