Control Ratios Homework Made Easy and Time Saving!

Control Ratios and their studies make up for a huge part of syllabus concerning the subject Accounts. Not only are they important but they also are quite relevant. A lot of students get wary of this topic once they fail to understand and end up with not only poor grades but also lack of grip on the subject. You do not have to fall into the trap and become like them. If you are facing problems with control ratios then is here to provide you the best control ratios homework help.

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Control Ratios:

If you ask a business subject’s related dictionary then they will tell you that control ratios are a measure of the gross revenue or proceeds obtained from any resource or asset in particular, such as inventory sales revenue.

For example, let us assume that cost price of raw materials used stands at $22,000. The beginning inventory and ending inventory are $10,000 and $8,000 respectively. The inventory sales revenue equals 2.22 ($20,000/$9,000) times.

What are the applications of control ratios in material control?

Control ratios can be applied to material control in the following ways:

  • If inventory sales revenue ratio is high, it indicates that your company’s product is being consumed fast and there is no block of money in your inventory.
  • If inventory sales revenue ratio is low, it indicates the product consumption is slow and money is being blocked in the inventory. Thus you have to bear additional cost for inventory holding. You either have to sell fast or consume it otherwise it may be rendered useless and capital loss will take place.
  • You can calculate average number of days the material needs to be in stock before it can be sent for production.

Types of ratios:

This information can be of great assistance if you are looking for control ratios homework help.

  • Activity ratio: It measures level of activity done over a period. It is the ratio between standard hours for actual production to budgeted hours of production.
  • Capacity ratio: It indicates whether the budgeted hours are used and if yes, how much. It is relation between actual numbers working hours to the highest number of working hours during budget period.
  • Efficiency ratio: This indicates efficiency of production.

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