If the Best Operating Level of a Piece of Equipment

question 6

Multiple Choice

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity cushion?

• A) 25 percent
• B) 100 units per hour
• C) 75 percent
• D) 125 percent
• E) 133 percent

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Definitions:

Fair Value

The estimated market price of an asset or liability, reflecting the amount for which it could be exchanged in an orderly transaction between knowledgeable, willing parties.

Trading Investment

Investments in financial instruments held for the purpose of selling them in the short term for a profit.

Realized Gain

It refers to the profit made from the sale of an asset or investment, which has been completed and is no longer just a theoretical or paper value.

Credit

An accounting entry that increases liabilities and shareholders' equity or decreases assets.