CPIM Practice Exam

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Given a work center standard of 2 units per hour, how is efficiency calculated if 210 units are produced in 100 hours?

48 percent
95 percent
105 percent
125 percent

The correct answer is: 105 percent

To calculate efficiency, you need to compare the actual output to the expected output based on the standard rate for that work center. In this scenario, the standard rate is 2 units per hour, and the work center was operational for 100 hours. Therefore, the expected output is calculated as follows: Expected Output = Standard Rate × Time Expected Output = 2 units/hour × 100 hours = 200 units Now, the actual output is given as 210 units. To find efficiency, you use the formula: Efficiency = (Actual Output / Expected Output) × 100% Substituting the known values: Efficiency = (210 units / 200 units) × 100% = 105% This means that the work center produced 105% of what was expected based on its standard operating rate. This reflects a higher than normal productivity level, indicating that the work center performed better than the standard set for it. Efficiency exceeding 100% is a positive sign that suggests that output was significantly optimized during the production period.