Question

Henry Inc., a manufacturing firm, is able to produce 1,000 pairs of sneakers per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units per hour. The plant actually operates only 27 days per month. Based on the current budget, Henry estimates that it will be able to sell only 500,000 units due to the entry of a competitor with aggressive marketing capabilities. But the demand is unlikely to be affected in future and will be around 515,000. Assume the month has 30 days. What is the master-budget capacity utilization level for this budget period

Answer 1

Answer:

515,000

Explanation:

The Master-budget capacity utilization is the expected level of capacity which a current budget needs. The term utilization means the amount of capacity needed to meet customer demand.

In the future, Henry Inc estmates that customer demand is unlikely affected and will be around 515,000 pairs for their current budget. Therefore the master-budget capacity utilization level for this budget period is 515,000 pairs.