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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 ratioSee 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
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.
Idle hours can be excluded from all of these.
They are a side issue: paid for but no work done.
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