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Labor Ratios

Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Labor Ratios

  • This topic has 4 replies, 2 voices, and was last updated 3 years ago by Ken Garrett.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • August 17, 2021 at 7:31 pm #631868
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Sir this is question made my me. I don’t want you to solve as it will be time consuming.
    Just tell me what should be done with idle hours.

    Budgeted hours – 12000
    Budgeted Units – 4000
    Actual hours – 14000
    Actual units – 4500
    Labor is said to be idle for 1500 hours.
    Find:
    (A) Efficiency Ratio
    (B) Capacity utilisation Ratio
    (C) Production Volume ratio

    August 17, 2021 at 7:59 pm #631870
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10594
    • ☆☆☆☆☆

    See p67 of our notes.

    ER = std hours for output achieved/actual hours.

    If identified separately, idle hours are excluded from actual hours so that the bottom libpne is actual hours worked.

    CUR uses hours worked. Idle hours cannot boost this.

    PVR makes no use of hours at all

    August 17, 2021 at 8:16 pm #631871
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Sir, I am just repeating to see whether I understood correct.
    Efficiency ratio would only subtract idle from actual hours when we are calculating efficiency only.

    Whereas, when PVR = ER x CUR is used so none of ratios (including efficiency ratio) will subtract idle from actual hours.

    August 17, 2021 at 8:48 pm #631874
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10594
    • ☆☆☆☆☆

    Idle hours can be excluded from all of these.

    They are a side issue: paid for but no work done.

    August 17, 2021 at 8:48 pm #631875
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10594
    • ☆☆☆☆☆

    Idle hours can be excluded from all of these.

    They are a side issue: paid for but no work done.

  • Author
    Posts
Viewing 5 posts - 1 through 5 (of 5 total)
  • The topic ‘Labor Ratios’ is closed to new replies.

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