CPIM Practice Exam

What is the formula for calculating efficiency?

1. Available time/hours worked

2. Standard hours produced/hours actually worked

3. Hours worked/standard hours

4. Average output/total input

The correct answer is: Standard hours produced/hours actually worked

The formula for calculating efficiency is derived from comparing the actual performance to the expected performance, which is typically represented by standard hours. The correct formula, representing efficiency, is calculated as standard hours produced divided by hours actually worked. This measure provides insight into how well resources (in this case, time) are being utilized relative to the expected output, allowing businesses to assess and improve their operational performance. The other options focus on different aspects of productivity or performance measurement. For instance, one option relates to the total available time and hours worked, which does not directly capture the efficiency concept as it lacks the standard metric for comparison. Another option inversely relates hours worked to standard hours, which measures productivity rather than direct efficiency. The last option combines average output with total input but does not align with the standard efficiency calculation formula. Thus, the emphasis on standard hours produced against actual hours worked is what confirms the solution provided as the correct one for calculating efficiency.