The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is anticipated to be 35 cords per day, what would be its utilization?
A)100 percent
B)80 percent
C)75 percent
D)70 percent
E)0 percent

Question

Quizplus · Accepted Answer

Utilization is calculated as the actual output divided by the design capacity. Here, the actual output is anticipated to be 35 cords per day, and the design capacity is 50 cords per day. Therefore, utilization = (35 / 50) * 100% = 70%.

The Owner of Firewood to Go Is Considering Buying a Hydraulic