PEV June 04 Q2.1 a

lilac_angel
lilac_angel Registered Posts: 66 💫 🐯 💫
Hi all,
Can anyone help me with this question.
I am stuck on how to calculate the labour capacity ratio & Labour efficiency ratio. Me and my collegue have been searching through my books but cant seem to find it anywhere.

Comments

  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    Make a note, these are on my short list for 30 Nov. The examiner refers to them in most of his reports but hasn't examined them recently.

    They are ratios, but are very similar to the fixed overhead efficiency and capacity variances.

    Efficiency ...............standard hours produced
    .............................actual hours worked

    It shows whether the hours worked were more or less than the standard hours we'd expect.
    If it is more than 1 (or100%) that shows an efficient workforce -quicker than standard
    If it is less than 1 (100%) an inefficient workforce

    Capacity again compares the same things as the variance (Actual hours and budgeted hours)

    actual hours worked
    .....budgeted hours

    If the actual hours worked are more than the budget we will have had more capacity than planned, and the ratio will be more than 1 (100%)
    If less, the ratio will be less than 1.
    Sandy
    [email protected]
    www.sandyhood.com
  • Tasha
    Tasha Registered Posts: 19 Dedicated contributor 🌟 🐵 🌟
    Hi
    Labour Capacity is Actual Hrs/Budget Hrs
    Labour Efficiency is Standard Hrs/Actual Hrs

    Hope this helps
    Regards Tasha
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    In this exam
    Actual hours worked: 58,200
    Budgeted hours: 60,000
    Standard hours: 5 hours per desk (60,000hrs/12,000 desks in the budget) x 11,200 desks produced = 56,000
    Sandy
    [email protected]
    www.sandyhood.com
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    Capacity: 58,200.........0.97 (or 97%)
    ...........60,000

    Efficiency: 56,000.........0.962 (or 96.2%)
    ...........58,200
    Sandy
    [email protected]
    www.sandyhood.com
  • lilac_angel
    lilac_angel Registered Posts: 66 💫 🐯 💫
    Thanks Sandy.
    DO you know what else is likely to come up?
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    I'll be covering as much as I think likely on Sat 14 Nov in the revision day in London

    for more details

    http://www.aat.org.uk/members/events/?type=Student%20Revision%20Course
    Sandy
    [email protected]
    www.sandyhood.com
  • lilac_angel
    lilac_angel Registered Posts: 66 💫 🐯 💫
    Thanks Sandy,
    I won't be able to go on the revision course as i can't afford to, i would like to as i found yours really helpful i went on one in for the june exam this year. unfortunately i still failed tho :-( only section 2 i'm mainly struggling with report writing and the life cycle costing.
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