Question

Suppose a company has a design maximum output of 280. Its actual output is 195 and its efficiency is 80%. Calculate its efficient output and its capacity utilization.

Answer 1

Effective output = 224

Capacity Utilization = 80%

Explanation:

Given the maximum output = 280

The actual output = 195

The efficiency = 80%

Below is the formula to calculate the efficiency.

Efficiency in percentage = (Effective output / Maximum output) x 100

Insert the given values in the formula.

80 =( Effective output / 280 ) x 100

Effective output = 280 x 0.8

Effective output = 224

Now the Capacity utilization ( %) = Actual output / Maximum output x 100

Capacity utilization in percentage = 224 / 280 x 100

Capacity Utilization = 80%