Figure 3-3 Mork Company has four process engineers that are each able to process 1,500 design changes.Last year 5,250 design changes were produced by the four engineers.Each engineer is paid $60,000 per year.
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Refer to Figure 3-3.What is the unused capacity in dollars?
A) $60,000
B) $30,000
C) $240,000
D) $15,000

Question

Quizplus · Accepted Answer

Each process engineer can process 1,500 design changes per year, so the total capacity of the four engineers is 6,000 design changes per year. However, only 5,250 design changes were produced last year, meaning that there is an unused capacity of 750 design changes. Since each engineer is paid $60,000 per year, the unused capacity in dollars is equal to 750 design changes x $60,000 per engineer = $4,500,000 total unused capacity. Dividing by four engineers gives an unused capacity of $1,125,000 per engineer. Therefore, the best answer is B, which is the closest to $1,125,000.

Figure 3-3 Mork Company Has Four Process Engineers That Are