Question

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity utilization rate?
A. 0.75
B. 1.00
C. 1.33
D. 2.33
E. 300

Answer 1

Answer:

A. 0.75

Explanation:

The computation of the capacity utilization rate is shown below:

= Actual output ÷  best operating level output

= 300 units ÷ 400 units

= 0.75

It shows a ratio between the actual output and the best operating level output through which the accurate rate can come.

Moreover, it also shows a relationship between the actual output and the best operating level output