capacity ratios

capacity ratios
Fin
measures of performance in the use of capacity.
EXAMPLE
The more commonly used capacity levels are: full capacity—output (expressed in standard hours) that could be achieved if sales orders, supplies, and workforce were available for all installed workplaces; practical capacity—full capacity less an allowance for known unavoidable volume losses; budgeted capacity—standard hours planned for the period, taking into account budgeted sales, supplies, workforce availability, and efficiency expected; normal capacity.
     On the following given data, the related ratios are set out below:
Idle capacity ratio is calculated as follows:
     (Practical capacity – budgeted capacity) × 100/Practical capacity = (95 – 81) × 100/95 = 15%, indicates the budgeted shortfall in capacity as a proportion of practical capacity.

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