Production volume ratio
The production volume ratio compares standard hours for actual output with budgeted hours: standard hours produced ÷ budgeted hours × 100%. It measures output achieved relative to planned output capacity on a standard-hour basis. It also equals capacity ratio multiplied by efficiency ratio divided by 100 when both are percentages. This costing use of activity ratio differs from general financial turnover ratios, so context must be preserved.
Worked example
Standard hours produced are 990 and budgeted hours 1,000, giving activity of 99%. Capacity 90% × efficiency 110% ÷ 100 gives the same 99%.
Common mistake
Do not substitute sales revenue or actual hours for standard hours produced in the numerator.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
