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hello,
In the question 3 in chapter 7 practice questions, I am confusing that why the answer of the capacity ratio is been simply actual hours / budgeted hours.I thought that
since they are different hours to produce per unit,
8000hours / 20,000 unit= 0.4 budgeted hours per unit
and 0.4hours x 25,000= 10,000, which is budgeted hours to produce 25,000.therefore, 11,000 (actual hours) / 10,000 ( budgeted hours) = 1.1
1.1 x 100 = 110%which mistake did i make sir??
But that is not the capacity ratio! The capacity ratio is measuring whether they have more or less hours available than what they budgeted on being available.
Have you not watched the lectures, because I work through all of the examples in the lectures and explain?
You should not use the lecture notes unless you are watching the lectures – they are simply lecture notes and it is in the lectures that I explain and expand on the notes.
If you are not watching the lectures for any reason then you must buy a Study Text from one of the ACCA approved publishers and study from there.
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