Labour Capacity % in PEV

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:08AM in AAT student discussion
Hi everyone, I did the PEV revision class where I was taught that Labour Capacity was Actual Hours/Original Budget hours x100.<BR><BR>I have received the answer from Sandy and noticed a slight error here where he put Forecast Hours/Hours Worked. <BR><BR>I can't remember what answers I got now, as it seems really long now to remember every single answer I got but have gone to my notes to find the right calculation of Labour Capacity.

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Capacity % in PEV

    I also noticed this. <BR><BR>I got 164% in my factory B answer so was looking out for this on Sandy's answers.<BR><BR>Would appreciate if someone could confirm that it should be as gaffarn has said.<BR><BR>Ta.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Capacity % in PEV

    Hey thats right gaffarn as June 2004 was the first time labour cap and eff came up and i had not idea how to calculate it. After going on the revision course a few weeks back now , thats when i learnt how to do those 2 ratios..... for my answers in december paper i got 97% and 164%.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Capacity % in PEV

    gaffarn<BR><BR>would you be able to email me the answers you have received? i have had a look at his site but they are not on there yet.<BR><BR>thanks ever so much.<BR>email is shepkaz@hotmail.com
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Capacity % in PEV

    I must admit that I have not added much narrative in the emails I have sent when attaching my answer to the PEV 29 Nov paper, but as always I welcome anyone who wishes to point out where I have made mistakes. And in case you think I am a prima donna who is too sensitive to be told, I do make mistakes. And I do like it when I am told. <BR>I have just altered the answer I have prepared for the website to read <BR>Budgeted labour hrs <BR>Full capacity hours <BR><BR>I understand the confusion, but these are my reasons for this: If we are looking at a factory we will look at whether it is working to full capacity or not. Factory A has a capacity of 70,000 hours (no doubt based on the number of workers on each shift, the number of hours per shift and the number of shifts the factory runs)<BR>I'll add another reply with some assumptions about numbers of workers etc, but that is not this topic.<BR><BR>My point is that if the shift pattern for the factory has a maximum of 70,000, but the budget is looking at working 75,000 hours then the factory is budgeting for a labour capacity ratio of over 100% (in this case 107.1%)<BR><BR>And if the budget is for only 85,000 of a maximum of 140,000 then Factory B is below full capacity of 100% (in this case 60.7%)<BR><BR>If you accept this point, which I hope, then the question about moving production into the below capacity site is more logical. Factory B could produce more, but is under capacity in the budget, so closing factory A and transfering all possible production accross would start to take up this slack.<BR><BR>I hope that makes sense. Another reply will follow.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Capacity % in PEV

    A point has been made about revision classes. I think I can see the problem, please tell me if I have misunderstood.<BR>Typically exam questions use labour capacity ratios to REVIEW THE PAST as a report.<BR>In that situation, you need to look at the Actual hours worked compared to those Budgeted<BR><BR>If the hours worked were greater than budget then the capacity is over 100%<BR><BR>If the hours worked were less than budget then the capacity is less than 100%<BR><BR>These are very good measures of the past, and I certainly discussed these in my revision days. And in case you are wondering, I did not discuss the forecast situation where you need to think about the future. <BR><BR>But I hope that the point is fairly clear. What my classes are familiar with is the idea of imagining yourself in the factory. Then visualising what goes on there.<BR>In Factory A I reckon the labour details could be very close to this<BR><BR>40 Staff<BR>2 shifts (one 7-3 the other 3-11)<BR>each shift has 20 staff approx<BR>Each member of staff works 50 weeks per year and 37.5 hrs per week<BR>The factory is open every week of the year<BR><BR>So there are no shifts on Saturdays and Sundays or between 11pm and 7am<BR><BR>From that point you can build up the total hours<BR>40 staff x 37.5hrs x 50 weeks = 75,000 budgeted hours<BR><BR>If the capacity is only 70,000, that may be because the factory is small and the staff have been squeezed into a space where it is comfortable for a maximum of 18 to work (there are several possibilities). If your imaginations are still ticking, think of factories where Christmas production has been flat out since October and erxtra staff have been drafted in. Each extra person on a shift is an extra 7.5 to 8hrs of capacity.<BR><BR>The same could apply to Factory B, a much bigger place - if the fixed assets are any indication of factory size. But somewhere budgeted to run on far fewer hours than it is capable of.<BR><BR>I hope I haven't written too much. And I hope it makes sense. I welcome any comments, but a point worth remembering for future exam candidates: understand what the ratios are trying to tell you, rather than trying to rote learn without the understanding.<BR><BR>sandy.hood@chichester.ac.uk<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Capacity % in PEV

    Thanks Sandy, It really is such a small question to all those students out there including myself......in the big scheme of it all its not gonna make every one fail the paper....so thanks Sandy for putting in so much time for us all. I think some of us go in to panic mode when faced having calculated it wrong........ :) woops...

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