Question

Under ideal​ conditions, a picture frame manufacturing facility can produce 480 frames per day. Under normal​ conditions, the company schedules 135 frames per day. Current market conditions and production strategy have combined to limit production to 120 frames per day. What is the approximate utilization rate for current​ capacity?

Answer 1

The answer is: The Capacity Utilization Rate of the company is 25%

Step-by-step explanation:

To calculate the capacity utilization rate (CU rate) of a company, you must divide the current level of output of the company by the maximum level of output possible, and then multiply by 100 to get a percentage rate.

CU rate = (current level of output / maximum level of output) x 100

The current level of output is 120 frames per day, so we divide 120 by 480 (which is the maximum level of output possible) and we get 0.25, then we multiply by 100 to get 25%.

CU rate = (120/480) x 100 = 25%