Calculate capacity ratio and efficiency ratio, Cost Accounting

Woodall Ltd has two production departments, X and Y. For month 2, the company budgets its overhead costs as:




Variable overhead



Fixed overhead



The absorption rate is based on labour hours in each department. The budgeted hours in each department are 5,000 for X and 8,000 for Y.

 At the end of month 2, department X had actually worked 4,900 hours, and department Y had worked 8,200 hours, and the standard hours produced were 5,200 in Department X and 8,100 in Department Y.

The actual expenditure on overhead for the month was:

Department X $42,500                            Department Y $59,500


(a) Calculate the under/over absorption of overhead in both of departments X and Y.

(b) State the factors that give rise to the under/over absorption of overhead.

(c) Analyse your answer to (a) above under the headings stated in b) above.

(d) State what is meant by the term "standard hour".

(e) For each of departments X and Y, calculate the following:

(i) Capacity Ratio,

(ii) Efficiency Ratio

(iii) Activity (Production Volume) Ratio

Posted Date: 2/26/2013 7:10:45 AM | Location : United States

Related Discussions:- Calculate capacity ratio and efficiency ratio, Assignment Help, Ask Question on Calculate capacity ratio and efficiency ratio, Get Answer, Expert's Help, Calculate capacity ratio and efficiency ratio Discussions

Write discussion on Calculate capacity ratio and efficiency ratio
Your posts are moderated
Related Questions
Methods of Labour Remuneration There Labour remuneration methods can be broadly classified into two factors as: i. Time rate or on the basis of the time spend in the factor

Mr. Marley is a wholesaler who buys and sells a wide range of products, one of which is the Laker. Mr. Marley sells 24,000 units of the Laker each year at a unit price $20. Sales o

Balance Sheet                                                                      2010                2011             Assets Cash

Period Costs Some terms are difficult to define. In one school of thought, period costs are the any costs that are not product costs. But, such a description is a stretch, beca

This is the amount charged due to the usage and passage of time. Fixed assets are utilized for earning revenue. Thus, a decrease in their value is considered to be the operational

A plant is considering the replacement of a piece of equipment in its materials handling system with a new piece. If the company's cost of capital is 10%. Should the present asset

on june 2005 20 units of the product in stock the following is extracted from the companys books direct material-200 per unit,direct labour 150 per unit, variable production overhe

Importance of Variance Analysis Variance analysis is aimed at getting practical pointers to the purposes of off-the -standard performance hence management can improve operatio

Use a selected company or your current work environment to identify at least one cost or expense that would fit under each of the following categories: • Variable • Fixed • Mixed •

The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage per worker is $80, and the price of the firm’s output is $25. The cost of other va