PEV  control ratios?
Options
twinmeister
Registered Posts: 122 Dedicated contributor 🦉
Can someone explain control ratios to me. I know the equations, but I'm struggling with what resultant figures for EFFICIENCY, ACTIVITY and CAPACITY actually tell me?
0
Comments

twinmeister wrote: »Can someone explain control ratios to me. I know the equations, but I'm struggling with what resultant figures for EFFICIENCY, ACTIVITY and CAPACITY actually tell me?
Activity = production level as a % of budgeted production
Capacity = hours worked as a % of expected hours
Efficiency = (bit harder to explain) how long it took to make the actual output compared to how long it should have taken according to the budget
While we're on the subject  surely we don't need to learn the Efficiency (Productivity) and Capacity Ratios as we already know them:
Efficiency and Capacity Ratios are just Efficiency and Capacity Variances viewed from a different angle. The variances look at the difference (xy) and the ratios look at one as a proportion of another (x/y)
Efficiency Variance = SR x (SHAH) Efficiency Ratio = SH/AH
Capacity Variance = SR x (AHBH) Capacity Ratio = AH/BH
Am I right?0 
You are right
1 piece of knowledge that enables you to answer 2 types of question
Efficient use of studying timeSandy
sandy@sandyhood.com
www.sandyhood.com0 
Thanks
I feel quite clever now!0 
After a few hours revision between posts, I think I see what you mean (!).
Control ratios are just the Fixed overhead volume ratio splits (FOEfficiencyV and FOCapacityV) viewed from a different perspective.
I was looking at control ratios as part of the 'measuring performance' sections in the Osborne textbook (ie. with all the other performance ratios).
It is all starting to hang together, but I don't feel clever yet!
Thanks for your help0
Categories
 All Categories
 1.2K Books to buy and sell
 2.3K General discussion
 12.4K For AAT students
 282 NEW! Qualifications 2022
 149 General Qualifications 2022 discussion
 11 AAT Level 2 Certificate in Accounting
 50 AAT Level 3 Diploma in Accounting
 71 AAT Level 4 Diploma in Professional Accounting
 8.8K For accounting professionals
 23 coronavirus (Covid19)
 270 VAT
 92 Software
 271 Tax
 135 Bookkeeping
 7.1K General accounting discussion
 198 AAT member discussion
 3.8K For everyone
 38 AAT news and announcements
 345 Feedback for AAT
 2.8K Chat and offtopic discussion
 580 Job postings
 16 Who can benefit from AAT?
 36 Where can AAT take me?
 42 Getting started with AAT
 26 Finding an AAT training provider
 48 Distance learning and other ways to study AAT
 25 Apprenticeships
 66 AAT membership