- 9 Marks
MA – Nov 2018 – L2 – Q5b – Standard costing and variance analysis
Calculation and interpretation of efficiency, capacity, and production volume ratios for Ghana National Gas Company.
Question
Ghana National Gas Company is a gas processing company and has its plant located in Atuabo in the Western Region. The plant produces three gas products – Lean Gas (LG), Liquefied Petroleum Gas (LPG), and Natural Gas Condensate (NGC).
The standard time for the production of the products are:
- LG – 40 minutes per metric tonne
- LPG – 30 minutes per metric tonne
- NGC – 45 minutes per metric tonne
The budget for the month of February is as follows:
- LG – 45,000 metric tonnes
- LPG – 25,000 metric tonnes
- NGC – 30,000 metric tonnes
The actual data for the month were as follows:
- Labour hours: 70,000 hours
- Production: LG – 48,000 metric tonnes, LPG – 27,000 metric tonnes, NGC – 25,000 metric tonnes
Required:
i) Compute and interpret the efficiency ratio. (3 marks)
ii) Compute and interpret the capacity ratio. (3 marks)
iii) Compute and interpret the production volume or activity ratio. (3 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Capacity Ratios, Efficiency Ratios, Production Volume Ratios, Variance Analysis
- Level: Level 2
- Topic: Standard Costing and Variance Analysis
- Series: NOV 2018
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