Hoosier Manufacturing operates a production shop that is designed to have the lowest unit production cost at an output rate of 115 units per hour. In the month of July, the company operated the production line for a total of 205 hours and produced 21,400 units of output. What was its capacity utilization rate for the month?

90.77%

its capacity utilization rate for the month is 90.77%

Explanation:

The capacity utilisation rate can be expressed mathematically as;

Capacity utilisation rate = capacity used/Best operating level * 100%

Given;

Total Number of production time = 205hours

Production output/capacity used = 21400 units

Best operation rate = 115units/hour

Best operation output for the month of July (at best operation level)

=115units/hour * 205 hours = 23575 units

Capacity utilisation rate = 21400/23575 * 100%

= 90.77%