Basically Control ratio is showing the variance between original data and budgeted data . With these ratio we can easily guess our favourable or unfavorable points in the performance . 1st control Ratio
Capacity Ratio
Actual hours worked
= ---------------------- X 100
Budgeted Hours
If it is 90% it means we can not use 10% of budgeted hours and our performance is less than our budget.
2nd Control Ratio
Efficiency Ratio = Standard hours for actual production / Actual hours worked X 100
If it is 125% it means we have increased 25% of our efficiency
3rd Control Ratio
Activity Ratio = Standard hours for actual production / Budgeted Standard hours X 100
See Also
