13 - Capacity utilisation

Question 1

capacity utilisation

Answer 1

how well teh business uses its resources. it measures the existing output as a percentage of the maximum output

Question 2

capacity utilisation =

Answer 2

exisitng output/ maximum possible output x 100

Question 3

benefits and drawbacks of working under capcaity utlisation

Answer 3

-idel reosurces costing money and not being used
-unit costs rise
+easier to grow because the busienss has the space to take on new orders

Question 4

benefits and drawbacks of working over-capacity utilisation

Answer 4

-employees are overworked and unhappy
-mistakes are likely
-units costs rise due to teh above
+opporunity for growth

Question 5

ways of increasing capacity

Answer 5

• delegate production to another business
• offer overtime to employees
• employ workers on temp contracts

Question 6

ways of reducing capacity utilisation

Answer 6

• rationalisation (redundnacies and sale of assets)
• sub contract in work from another business