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Effeniciy & Capacty Ratios MAC

A-VicA-Vic Expertise GuaranteedRegistered Posts: 6,970
Trying to get my head around these for budget controls

Output in units 257,300
Budget Output 250,000
Hours Worked 24.400

Standard time for each unit of production 6 minutes

i have effiency at 105.45%
and capcity at 97.60%


what are these trying to tell me? Sorry just for my understanding i know probs seems straightforward

Thanks in advance


Vic

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    A-Vic wrote: »
    Trying to get my head around these for budget controls

    Output in units 257,300
    Budget Output 250,000
    Hours Worked 24.400

    Standard time for each unit of production 6 minutes

    i have effiency at 105.45%
    and capcity at 97.60%


    what are these trying to tell me? Sorry just for my understanding i know probs seems straightforward

    Thanks in advance


    Vic

    Gah, I hated MAC. I dimly remember it but assuming the question isn't asking you to calculate budgeted / standard costs etc and only asking you to comment on the percentages:

    Efficiency over 100% would imply that things are either being made quicker, or cheaper
    Capacity under 100% implies it can produce more.
    You'd have to calculate the actuals to add more relevant commentary to the above.

    Hope that helps. It probably doesn't. I just feel really sorry for anyone doing MAC! ;)
  • RinskeRinske Font Of All Knowledge Registered Posts: 2,453
    If I remember correct, based on your percentages, what it says is they did the work more efficiently, but they didn't use the full capacity of the month.

    Aka they took less time per unit, than planned (24,400 instead of 25,730 hours for the actual production)

    However, they didn't use the full capacity. They only worked 24,400 hours instead of the planned 25,000.

    Does that make sense?

    Cheers,
    Rinske
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Thanks monsoon its just for my understanding of what the ratios are telling us, am doing chapter 11 of BPP Book i see myself why they left MAC till the second part of the college year really struggling
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Rinske wrote: »
    If I remember correct, based on your percentages, what it says is they did the work more efficiently, but they didn't use the full capacity of the month.

    Aka they took less time per unit, than planned (24,400 instead of 25,730 hours for the actual production)

    However, they didn't use the full capacity. They only worked 24,400 hours instead of the planned 25,000.

    Does that make sense?

    Cheers,
    Rinske

    Great thanks just what i was after :)
  • AK002AK002 Font Of All Knowledge Registered Posts: 2,492
    God i hated this subject lol - good luck :)!
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    think am gonna need it
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    A-Vic wrote: »
    think am gonna need it

    Once you've got it, you've got it. It just took ages for it to fall into place for me.
    Depending on the way your brain works, I found it useful to nail the different things into formulae (budgeted cost = a x b, standard cost = b x c, acutal cost = a x c [note this isn't right but the gist is] and then work out what a, b, and c are from looking at the question. Then you can approach the question feeling relatively confident (!) that you will at least get the calculations right because you can just drop the given numbers into the relevant formula. The more you do it the more you will feel ok with commentary too.

    idk if that helps or not....! :)

    It took me ages to work out the difference bewteen budget and standard.
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Thanks monsoon just feels like am never gonna get these but keep plodding on
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Rona

    can i check is it ?

    OP/Net Assets (after deduction of deprication?)
  • Lyn32Lyn32 Feels At Home Registered Posts: 85
    Hi Guys,

    It sounds MAC is quite a handy subject, I can't wait to get started but I haven't recieved my purchases yet. I wasn't pleased at all, I been told it will be arrived by Friday but no luck .

    I'm hoping will be, in my doorstep tommorrow and hopefully I can relate this thread and much more information will keep on coming that would be helpful.
    .
  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    Lyn
    I think it is a good subject area too.

    As far as the two ratios featured here, I have often found them more useful than the equivalent fixed overhead variances. When feeding back to managers, they can often relate to a % (or equivalent decimal) rather than a sum of money value.

    And the interpretation A-Vic asked for has already been provided by Rinske and Monsoon.
    Sandy
    [email protected]
    www.sandyhood.com
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