Plant Efficiency and Capacity

6. If a plant was designed to produce 7,000 hammers per day but is limited to making 6,000
hammers per day because of time needed to change equipment between styles of hammers, what is
the utilization? Format as xx.x% (include the % sign.)

7. For the past month, the hammer plant in the above problem, which has an effective capacity of
6,500, has made only 4,500 hammers per day because of material delay, employee absences, and
other problems. What is the efficiency? Format as xx.x% (include the %).

8. If a plant has an effective capacity of 6,500 and an efficiency of 88%, what is the actual (planned)
output? Format as xxxx.

9. A plant has an effective capacity of 900 units per day and produces 800 units per day with its
product mix; what is its efficiency? Format as xx.x% (include the % sign.)

10. Material delays have routinely limited production of household sinks to 400 units per day. It the
plant efficiency is 80%, what is the effective capacity? Format as xxx.

12. You are considering opening a copy service in the student union. You estimate your fixed cost at
$15,000 and the variable cost of each copy sold at $.01. You expect the selling price to be $.05.
What is your breakeven point in dollars? Format as $xx,xxx

13. For the same copy service as above with a fixed cost of $15,000 and the variable cost of each
copy sold at $.01 and a selling price to be $.05. What is your breakeven point in units? Format as
xxx,xxx (include the comma.)

Solution Preview
Problem #6
The utilization is 6000/7000 = 6/7 = 85.7%
Problem #7
The efficiency is 4500/6500 = 9/13 = 69.2%
Problem #8
The actual output is 6500 * 88% = ...