CAT / FIA FMA Syllabus F. Performance Measurement - Manufacturing business - Notes ^{12 / 15}

The following are the three main control ratios for measuring performance in manufacturing businesses

1. Efficiency Ratio

   The efficiency ratio measures the performance of the workforce by comparing the actual time taken to do a job with the expected time.

   Efficiency Ratio = 

   Expected hours to produce output        x 100%
   ----------------------------------------
   Actual hours to produce output
   

2. Capacity Ratio

   The capacity ratio measures the number of hours spent actively working as a percentage of the total hours available for work.

   Capacity Ratio =

   Number of hours actively spent working    x 100%
   ------------------------------------------
   Total hours available
   
   

3. Production Volume or Activity Ratio

   The activity ratio compares the number of hours expected to be worked to produce actual output with the total hours available for work.

   Production Volume/Activity Ratio =

   Expected hours to produce actual output     x  100%      
   ------------------------------------------------
   Total hours available