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A company makes a product for which the standard hour is 0.5 . The budgeted production hours for a given week were 820. During the
A company makes a product for which the standard hour is 0.5 . The budgeted production hours for a given week were 820. During the week the production staff were able to produce 380 units of product. Staff were paid for 800 hours. During the week 20 production hours were lost due to a shortage of material.
What was the efficiency ratio?
and the solution I have is :
efficiency ratio= actual output in standard hours/actual hours* 100%
=380/0.5
_______ * 100% = 97.44%
780 hrs.
my question is that why did we divide 380 by 0.5 and not multiply it?
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