Question
Download Solution PDFABC Ltd. produces two products X and Y in its production unit. Each unit of X and Y takes 5 hours and 10 hours as production time respectively. 1000 units of X and 600 units of Y were produced in a month. Actual man-hours in this production were 10,000. Yearly budgeted hours are 96,000. The activity ratio is -
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is 137.50%.
Key Points The correct answer is 137.505.
The activity ratio is calculated by dividing the actual production volume by the budgeted production volume. In this case, the activity ratio is 1000 units of X + 600 units of Y / 1200 units of X + 1200 units of Y = 137.505. This means that ABC Ltd. is operating at 137.505% of its budgeted capacity.
Here is the calculation:
Actual production volume / Budgeted production volume = Activity ratio
1000 units of X + 600 units of Y / 1200 units of X + 1200 units of Y = 137.505
Activity ratio = 137.505
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