2. (v) Labour cost budget (vi) Cash budget (vii) Capital expenditure budget Master budget: The master budget is a summary budget. This budget encompasses all the functional activities into one harmonious unit. The ICMA England defines a Master Budget as the summary budget incorporating its functional budgets, which is finally approved, adopted and employed. (C) Classification on the basis of capacity 100 1. Fixed budget: A fixed budget is designed to remain unchanged irrespective of the level of activity actually attained. 2. Flexible budget: A flexible budget is a budget which is designed to change in accordance with the various level of activity actually attained. The flexible budget also called as Variable Budget or Sliding Scale Budget, takes both fixed, variable and semi fixed manufacturing costs into account. t40 8.7.1. Control Ratios Ratios are used by the management to determine whether performance of its activities is going on as per estimates or not. If the ratio is 100% or more, the performance is considered as unsatisfactory. The following are the ratios generally calculated for performance evaluation 1. Capacity ratio: This ratio indicates the extent to which budgeted hours of activity is actually utilised Capacity Ratio Actual hours worked production Budget hours 2. Activity ratio: This ratio is used to measure the level of activity attained during the budget period Activity ratio Standard hours for actual production Budgeted hours 100 3. Efficiency ratio: This ratio shows the level of efficiency attained during the budget period Standard hours for actual production Efficiency ratio Actual horus worked 100 4. Calendar ratio: This ratio is used to measure the proportion of actual working days to budgeted working days in a budget period. Calendar ratio Numbr of actual working days in a period Budgeted working days for the period Illustration 1. A company produces two articles A and B. Each unit takes 4 hours for A and 10 hours for B as production time respectively. The budgeted production for April, 2005 is 400 units of A and 800 units for B. The actual production at the end of the months was 320 units of A and 850 units of B. Actual hours spent on this production were 200. Find out the capacity, activity and efficiency ratios for April 2003. Also find out the Calendar ratio if the actual working days during the month be 28 corresponding to 26 days in the budget. 100