The control ratios used by the management to know whether the deviations of the actual performance from the budgeted performance are favourable or unfavourable are __________.

Capacity ratio and Activity ratio

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Efficiency ratio and Calendar ratio

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Both A and B

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None of the above

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Solution

The correct option is B Both A and B
To find out the deviations of the actual performance with the budgeted performance, there are various control ratios are calculated i.e. Capacity ratio and calendar ratio.

Capacity ratio indicates the extent to which the budgeted hours of activity is actually utilized. Its a proportion of Budgeted hours and actual hours.

Calendar ratio indicates the whether in all the budgeted working days in a budget period have been available in actual practice. If this ratio is more than 100%, more days have been available in actual practice and vice versa.

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