Question

If the actual output of a piece of equipment during an hour is 500 units and it's best operating level is at a rate of 400 units per hour, which of the following is the capacity utilization rate?

A. 0.75
B. 1.00
C. 1.25
D. 1.33
E. 100

Answer 1

C. 1.25

Step-by-step explanation:

Mathematically;

Capacity utilization rate= actual output per hour / operating level rate per hour

Actually output per hour= 500units

Operating level rate per hour= 400

Hence,

Capacity utilization rate= 500/400

Capacity utilization rate= 1.25