The Maximum Output Rate That Can Be Achieved by a Facility

question 105

Multiple Choice

The maximum output rate that can be achieved by a facility under ideal conditions is _________________.

• A) utilization
• B) design capacity
• C) effective capacity
• D) ultimate capacity
• E) temporary capacity

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Definitions:

Sales Increase

The rise in the quantity or revenue of products sold by a company over a specific period.

Margin of Safety

The difference between actual or expected sales and sales at the break-even point, indicating how much sales can fall before a business incurs a loss.

Break-even Point

The level of sales at which profit is zero.

Degree of Operating Leverage

A ratio that measures how a percentage change in sales will affect profits, highlighting the impact of fixed costs on earnings.