The Maximum Output That a Process or Facility Can Achieve

question 20

Multiple Choice

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

• A) utilization.
• B) effective capacity.
• C) throughput time.
• D) peak capacity.

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Definitions:

Fixed Expenses

Costs that do not fluctuate with changes in production volume or sales, such as rent, salaries, and insurance premiums.

Net Operating Income

The earnings generated from the primary activities of a business, before subtracting interest and tax expenses.

Break-even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for the business.

Unit Sales

The quantity of product sold by a company in a given period.