A factory has a capacity utilization ratio of 85% and its activity ratio is 95%. Which one of the following is the efficiency ratio?

CA Intermediate · Cost and Management Accounting · MTP · September 2024
A factory has a capacity utilization ratio of 85% and its activity ratio is 95%. Which one of the following is the efficiency ratio?
(A) 120%
(B) 110%
(C) 112%
(D) 90%

Suggested Answer and Working Notes:

Correct Answer: Option (C)

112%

Topics: Overheads - Absorption Costing Method

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