Capacity Minutes and Industry Norms

Activity Based Costing
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Activity Based Costing > Best Practices > Capacity Minutes and Industry Norms

Capacity Minutes and Industry Norms
Karlene, South Africa, Member
Productivity levels in minutes - productive time Work days are about 480 minutes (8 x 60). Where could I find what the industry norms are? Are there examples that show the average for the industry to be for example 60% capacity (288 minutes) or other and what is the norm? (...) Read more? Sign up for free

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  Capacity and Industry Norms
Hariom Agrawal, Director, India, Member
  Capacity in any industry is the outcome of the process and resources used. There can not be any standard norms as generalized norm. The capacity and norm of the machine is defined by the machine manufacturer, whereas the capacity of a human resource depends upon the nature of the task / activity and environmental conditions around.
The objective is to benchmark to minimize the gap between the cost estimation and actual cost in any industry.

  Capacity in ABC
Rajendra Patil, Consultant, India, Member
  When I perform ABC modeling I use the following method which is generally accepted by the clients:
# of days - calendar days - weekly off - average paid leaves
# of hours - 8 - lunch break - natural breaks
Efficiency - 80%
The values of these calculations give the # of minutes per day per person.
Now we have to convert the 'headcount' into the full time equivalent (FTE)'. For this all the persons who perform the day-to-day activities taken in the ABC model are taken as 1 FTE. For the supervisors it depends on the % of their time devoted to the daily activities.
In all of this, the employees on roll as well as those on contract are considered.

  Rate Calculation
Hariom Agrawal, Director, India, Member

  Capacity in ABC
Rajendra Patil, Consultant, India, Member

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