A company manufactures two products X and Y. Product X requires 8 hours to produce while Y requires 12 hours. In April, 2024, of 22 effective…
CA Intermediate · Cost and Management Accounting · MTP · September 2026
A company manufactures two products X and Y. Product X requires 8 hours to produce while Y requires 12 hours. In April, 2024, of 22 effective working days of 8 hours a day, 1,200 units of X and 800 units of Y were produced. The company employs 100 workers in production department to produce X and Y. The budgeted hours are 1,86,000 for the year. You are required to Calculate: (i) Capacity Ratio, (ii) Activity Ratio and (iii) Efficiency ratio.
Suggested Answer and Working Notes:
Working Note: Actual Hours (AH) = 22× 8 ×100 = 17600 Hrs. Standard Hours (SH) = (1200×8 +800 ×12) =19,200 Hrs. Budgeted Hours (BH) = 1,86,000/12 = 15,500 i. Capacity Ratio = (Actual Hours (worked) / Budgeted Hours) x 100 = (17600÷15,500) ×100 = 113.55% ii. Activity Ratio = (Standard Hours (for actual production) / Budgeted Hours) x 100 = (19,200÷15,500) ×100 = 123.87% iii. Efficiency Ratio = (Standard Hours (for actual production) / Actual Hours (worked)) x 100 = (19,200÷17,600) ×100 = 109.09%
Topics: Employee Cost & Direct Expenses
Related Questions in this Topic
- The following expenditures were incurred in Aditya Ltd. For the month of March 20X8: Amount (₹) (i) Paid f...
- The existing incentive system of Alpha Limited is as under: Normal working week 5 days of 8 hours each plus 3 late ...
- Pre-determined factory overhead rate was ₹ 15 per labour hour. Actual labour hour worked 60,000. Actual factory overhead...
- Mr. A works in a manufacturing company where he is paid bonus according to the Halsey 50% plan, besides the normal wages...
- Greenfield Apparel Manufacturing Ltd., a garment export unit located in Tirupur, Tamil Nadu, employs a team of skilled t...