3.4.2

Question 1

What is the equation for labour productivity?

Answer 1

Labour productivity =

output per time period / Number of employees

Question 2

What is the equation for unit cost?

Answer 2

Unit costs =

total cost of production/Number of units of output produced

Question 3

What is the equation for capacity utilisation?

Answer 3

Close to utilisation =

(actual output/maximum possible output) x 100

Question 4

What are the 6 different ways to increase efficiency and labour productivity by using labour productivity data?

Answer 4

1. Set targets and motivate workforce
2. Identify training needs of workforce
3. Test different production techniques, like team-working or cell production
4. Measure workforce efficiency
5. Tool to identify employees for praise and reward
6. Tool for performance related pay

Question 5

What are the 5 different ways to use unit cost data?

Answer 5

1. Set prices based on profit margin target
2. Make decision on which product to produce
3. Make decisions on scale of production – what level of output will achieve a sufficiently low cost
4. Use with variable cost to analyse distribution of overheads
5. Use as a target to drive operational decisions like how, where and what to produce

Question 6

What are the 4 different ways to use capacity utilisation data?

Answer 6

1. Setting targets for output
2. Identifying when capacity should increase
3. Identifying when capacity should decrease
4. Identify maximum level of output before production becomes ineffective

Question 7

When is capacity utilisation data most effective?

Answer 7

When used alongside other measurements of performance, such as labour productivity and unit costs