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a. Calculate the weekly capacity of the plant.
(1) State the Definition:
(2) Calculate:
b. If the firm produces the quantity shown below, at what percentage of the capacity will it be operating each week?
| week | 1 | 2 | 3 | 4 |
| Actual Production | 30,000 | 32,000 | 38,000 | 40,000 |
| Ratio |
(1) What ratio are you calculating?
(2) State the formula:
(3) Calculate:
Expert Answer
Answer
A)
1.Definition: Weekly capacity simply is the amount of unit a machine can make given the number of hours a machine runs in a day.
2.Calculation:
The no of units/week = 375 units per hour * 8 hours per shift *2 shifts per day* 6 days per week
The no. of units/week = 36,000 batteries
B)
| Week | 1 | 2 | 3 | 4 |
| Actual Prod | 30000 | 320000 | 380000 | 40000 |
| Capacity | 36000 | 36000 | 36000 | 36000 |
| Ratio | 83.33% | 88.89% | 105.6% | 111.1% |
1)We are calculating Capacity Utilization Ratio
2)Capacity utilization Ratio : Acutal or Forcasted Demand/ Capacity of the machine
