Question

A manufacturing shop is designed to operate most efficiently at an output of 1,150 units per day. In the past month, the plant averaged 980 units per day.

What was its capacity utilization rate last month?

Capacity utilization rate? _________

Answer 1

Question: A manufacturing shop is designed to operate most efficiently at an output of 1,150 units per day. In the past month, the plant averaged 980 units per day.

What was its capacity utilization rate last month?

Answer: Capacity utilization rate = 85.22 %

Explanation:

Given that:

Capacity = 980 per day

Output = 1150 per day

Now:

Capacity utilization rate is given by:

Capacity utilization rate = Capacity / Output

Therefore:

Computed for a month:

Capacity = 980 x 30 = 29400

Output = 1150 x 30 = 34500

Hence

Capacity utilization rate = 29400 / 34500

Capacity utilization rate = 0.85217391304 x 100

Capacity utilization rate = 85.22 %