Tuesday, January 24, 2012

Utilization Rate & Capacity Utilization

Source: Wikipedia + others

Utilization Rate or Capacity Utilization Rate: 
The Utilization Rate also known as charge-ability ratio is the percentage of total labor dollars or hours spent or 'charged' to project production. 

Utilization Rate is an important number for firms that charge their time to clients. It shows the billing efficiency of an individual or a firm

Capacity Utilization:
It is a concept in Economics and Managerial Accounting which refers to the extent to which an enterprise or a nation actually uses its installed productive capacity. Thus, it refers to the relationship between actual output that 'is' produced with the installed equipment and the potential output which 'could' be produced with it, if capacity was fully used.

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