Score: 2.5 of 10 pts 3016(5 complete) HYV Score: 625% 250 TI9-4 (similar to) Que

Question

Score: 2.5 of 10 pts 3016(5 complete) HYV Score: 625% 250 TI9-4 (similar to) Questi Hel Winged Feet, Inc. can produce 1,200 pairs of sneakers per hour at maximum efficiency There are three 8-hour shits each day. Due to unavoidable operating interruptions, production averages 700 units per hour. The plant actually operates only 22 days per month. Based on the current month's budget, Winged Feet estimates that it will be able to sell only 353,000 units due to the entry of a competitor with aggressive marketing capabilities. But demand is unkkely to be future and will average around 368,000 units each month Assuming 30 days per month, calculate Winged Feet's monthly (a) theoretical capacity, (b) practical capacity, (c) normal capacity utilization, and (d) master budget capacity utilization (a) Winged Feets oonthly theoretical capacity is 864,000 units (b) Winged Foat's monthly practical capacity is units

Explanation / Answer

Maximum capacity at full efficiency 1200 units 3 shift of 8 hours a day Due to unavoidable circumstances, capacity reduces to 700 units Actual operation days 22 days Current month sell capacity 353000 per month Normal demand 368000 per month a. Therotical capacity =capacity per hour x number of shifts per day x hours per shift x days per month =1200*3*8*30 864000 b. Practical capacity =capacity per hour x number of shifts per day x hours per shift x Actual days per month =1200*3*8*22 633600 c. Normal Capacity utilization Normal capacity utilization means capacity needed to meet customer demand. In current month customer demand is expected at 353000 units, but normal demand is 368000 units per month. Hence Normal Capacity Utilization 368000 units d. Master Budget Capacity Utilization Master-budget capacity utilization mens expected level of capacity needed for budget. In current month customer demand is expected at 353000 units. Master Budget Capacity Utilization 353000 units

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