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Budgeted and actual production data for the year that has just ended are as follows.
Product—–Budgeted production———————————-Actual production
—————-Units————–Standard machine hours——- Units
W————–15,000—————-3,000—————————–12,000
X————–20,000—————-8,000——————————25,000
Y————–14,000—————-7,000——————————16,000
Z————–6,000—————-9,000——————————–5,000
Total machine hours worked in the period amounted to 29,000 hours.
7.2 What was the efficiency ratio in the year, as a percentage to one decimal place?
A 96.2%
B 103.3%
C 103.9%
D 107.4%1. answer straight can be found by efficiency formula standard hours / actual hours * 100.
2. standard hours = standard machine hours/budgeted units * actual units.
3. we get 0.2 per unit * 12000 = 2400 hours (what should have taken to output 12000 units).
4. do it for all of them then add up (total standard hours) and divide but 29,000 hours (actual hours).
5. multiply by 100 and answer is A 96.2%.
this was a trick question to make you think that given standard hours are the same as standard machine hours.
Mistakes: didn’t provided question just thought everyone had same kit as you, question was 7.2 not 6.2. and you wrote 93.1% from previous question instead of 96.2%.