Labour Capacity/Labour efficiency

Esme Registered Posts: 711 Epic contributor 🐘
Can someone please give me the ratios for these.

Thx... slowly getting there!


  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
    I believe you mean F.Overheads Capacity variance and F.Overheads Efficiency variance

    The total of FO Capacity + FO Efficiency = FO Volume(production) variance

    Capacity Variance = ( Budgeted L/Hrs less Actual L/hrs times ) times Overhead Absorption rate
    Efficiency Variance = ( Actual Labours Hrs less flexed (expected) Labour Hrs) times Overhead Absorption rate
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    If you are asking about ratios then these are very similar to the variances, divide rather than subtract; i.e.
    Labour capacity = hours worked
    Labour capacitynnnbudgeted hours

    Labour efficiency = standard hours produced*
    Labour capacitynnnhours worked

    *standard hours produced = units produced x standard hours per unit
  • Esme
    Esme Registered Posts: 711 Epic contributor 🐘
    Yes Sandy, that's what I meant.. thanks very much once again :)
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