CA Inter P4 · Chapter 14 · Question 7 of 7
Budgeted direct labour hours for a month are 10,000. Actual hours worked were 9,000 and the standard hours for the actual output were 9,900. The activity ratio is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 99%
Explanation
Activity ratio = standard hours for actual output / budgeted hours x 100 = 9,900 / 10,000 x 100 = 99%. For reference, capacity ratio = 9,000/10,000 = 90% and efficiency ratio = 9,900/9,000 = 110%; activity ratio = capacity ratio x efficiency ratio.
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