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The capacity utilisation rate is determined by the ratio of best operating level and capacity used.Group of answer choicesTrueFalse

Question

The capacity utilisation rate is determined by the ratio of best operating level and capacity used.Group of answer choicesTrueFalse

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Solution

False.

Explanation:

The capacity utilization rate is determined by the ratio of actual output (capacity used) to the maximum possible output (best operating level), not the other way around.

So, the formula for capacity utilization rate is:

Capacity Utilization Rate = (Actual Output / Best Operating Level) * 100%

Therefore, the statement "The capacity utilisation rate is determined by the ratio of best operating level and capacity used" is false.

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