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I’m not clear about how the labor ratios help manager manage labor…
For example, if the labor capacity ratio is more than100%, the manager would make employees work more? if so, would the hourly basis change? I am confused…
I do want to know how to use these rations…They help identify the reasons for things being different from budget.
If the company produced more units than budgeted, it could be because the workers worked faster (which is what the efficiency ratio measures) or it could be because they got more hours of work than they budgeted (which is what the capacity ratio is measuring) – or, of course, a combination of the two.
Obviously it can work the other way round. Suppose they produced less units than budgeted – they need to know whether it was because the workers were inefficient and taking too long (so that they can try and do sometime about it) or maybe in fact the workers were more efficient, but they had less workers than they expected.
No, it is quiet easy look!
idle time is simply the unproductive time and unproductive time means in which we do not produce anything. its mean if we deduct the productive(actualy hours worked) time from the total time worked by a worker the remaining will be unproductive time( idle time). But remember we make payments for total time.
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