help.....Labour capacity ratio (PEV)
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Hi there<BR><BR>I know its probably too late but i was wondering if someone could please explain how they work out the labour capacity and labour efficiency ratio in the June 2004 PEV exam. (nothing like leaving it till the last minute....hehe)<BR><BR>Many thanks<BR>Louise
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help.....Labour capacity ratio (PEV)
Hi Louise,<BR><BR>I do this by thinking how I calculate the fixed overhead variances and turn them on their head:<BR><BR>eg Fixed Overhead Capacity variance :<BR><BR>Budgeted Hours/Actual Hours x Absorption rate<BR><BR>Labour Capacity variance:<BR><BR>Actual Hours/Budgeted hours (then hit % button)<BR><BR>Same goes for labour efficiency ratio.<BR><BR>The other ratio that may come up is activity. The way I remember this is just as above but using the volume variance formulae.<BR><BR>Hope this helps. If you want to e-mail me at TMSJGRIMES@aol.com I will send you a visual aid for it.0 -
help.....Labour capacity ratio (PEV)
It is just the BASH formula on its head. <BR><BR>The differences between<BR><BR>BH x SR<BR><BR>AH x SR<BR><BR>SH x SR<BR><BR>gives you the capacity variance (BH - AH) and efficiency variance AH - SH and the total Volume variance is therefore BH - SH.<BR><BR>In ratios, just turn them upside down, thus AH/BH x 100% gives you capacity ratio<BR><BR>SH/ AH x 100% gives you efficiency and SH/BH x 100% gives you the volume/ activity / production ratio<BR><BR>Aide memoire: : BASH0