Wednesday, 16 December 2015

Objectives of Labour Capacity utilization

Objectives of Labour Capacity utilization


Objectives of labour capacity utilization is to determine that how much of available resources of firm are being utilized. This concept also gives information about the availability of resources for new project. The labour capacity utilization is calculated by following simple formula

Labour Capacity utilization Ratio =   Hour Spent by Labour   x 100
                                                       Total Available hour
Example
Labour Hours available for projects= 2000
Total hours utilized or spend by Labour = 1600
How resources were used?

Solution
Labour Capacity utilization Ratio =   Hour Spent by Labour   x 100
                                                      Total Available hour
= (1600/2000) x 100
=80%

80% of labour resources were utilized by the entity.






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