Labour Efficiency and Capacity Ratios

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
<BR>Please explain to me what the labour efficiency and capacity ratios are and how thy are calculated. I cant find anything on them in my BPP book.<BR><BR>Also give an easy guide to understanding what gearing ratio is before i cram the fomulae<BR><BR>Paddy

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Efficiency and Capacity Ratios

    For Labour Efficiency a quick formula to remember is :<BR><BR>(SH - AH) x SR<BR><BR>(Standard Hours - Actual Hours) X Standard Rate<BR><BR>Not to sure about Capacity ratios though, i hope that formula helps a bit!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Labour Efficiency and Capacity Ratios

    Hi Paddy.<BR><BR>Labour Efficiency Ratio is: Standard Hours (of Actual Production) / Actual Hours * 100 = x%<BR><BR>Labour Capacity Ratio is: Actual Hours / Budgeted Items * 100 = x%<BR><BR>Gearing is a measure of how much you are financed by loans - this figure shouldn't be too high.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Labour Efficiency and Capacity Ratios

    Thanx very much mate. I could not have known. Its all clear now
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Labour Efficiency and Capacity Ratios

    Thanx Carly. I understand how to calculate both the ratios now.

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