• 1 Marks

MI – Nov 2020 – L1 – SA – Q6 – Costing Techniques

Calculate the capacity ratio based on actual and budgeted labour hours.

The data below are from the records of a company:

  • Budgeted labour hours: 4,500
  • Actual labour hours: 4,200
  • Standard hours produced: 4,400

The capacity ratio is:

A. 107%

B. 102%

C. 98%

D. 95%

E. 93%

E. 93%

Explanation: The correct answer is E because the capacity ratio is calculated by comparing the actual labour hours worked to the budgeted labour hours

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