Efficiency in accounting is a measure of how effectively an organization can produce and distribute its product, typically quantified by comparing standard hours allowed for production and actual hours taken.
An efficiency ratio is a measure used to assess the efficiency of labor or an activity over a period by comparing the standard hours allowed for production to the actual hours taken. This metric, typically expressed as a percentage, helps in evaluating how well resources are utilized within a production process.
A standard hour represents a measure of production that quantifies the amount of work or number of units produced within an hour under normal conditions. It is instrumental in calculating efficiency ratios and efficiency variances.
