Questions: Problem 4-2 (Algo) A company has a factory that is designed so that it is most efficient (average unit cost is minimized) when producing 17,400 units of output each month. However, it has an absolute maximum output capability of 21,000 units per month, and can produce as little as 7,000 units per month without corporate headquarters shifting production to another plant. If the factory produces 12,280 units in October, what is the capacity utilization rate in October for this factory? Note: Round your answer to 1 decimal place.

To determine the capacity utilization rate for the factory in October, we need to use the following formula:

\[ \text{Capacity Utilization Rate} = \left( \frac{\text{Actual Output}}{\text{Maximum Output}} \right) \times 100 \]

Given:

• Actual Output in October = 12,280 units
• Maximum Output Capability = 21,000 units

Now, we can plug these values into the formula:

\[ \text{Capacity Utilization Rate} = \left( \frac{12,280}{21,000} \right) \times 100 \]

First, calculate the fraction:

\[ \frac{12,280}{21,000} = 0.5857 \]

Next, multiply by 100 to convert to a percentage:

\[ 0.5857 \times 100 = 58.57 \]

Rounding to one decimal place:

\[ 58.6\% \]

Therefore, the capacity utilization rate in October for this factory is 58.6%.