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Accounting for labour
Labour ratios
4.1 Labour turnover
Labour turnover is a measure of the proportion of people leaving relative to
the average number of people employed.
Number of leavers who required replacement ÷ average number of
employee’s × 100
4.2 Labour efficiency
The labour efficiency ratio measures the performance of the workforce by
comparing the actual time taken to do a job with the expected or standard
time.
Standard hours for actual output ÷ actual hours worked to produce output ×
100
4.3 Labour capacity
The labour capacity ratio measures the number of hours spent actively
working as a percentage of the total hours available for work (full capacity
or budgeted hours).
Actual hours worked to produce output ÷ total budgeted hours × 100
4.4 Labour production/volume
The labour production volume ratio compares the number of hours
expected to be worked to produce actual output with the total hours
available for work (full capacity or budgeted hours).
Standard hours for actual output ÷ total budgeted hours × 100
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