1.4.2 Capacity Utilisation

What is the definition of Capacity Utilisation?

• The total output that a business can produce in a given period.

• The percentage of total capacity that is actually being achieved in a given period.

• The total number of units produced by a business in a year.

• The amount of resources used by a business in production.

Why is Capacity Utilisation important for businesses?

• It helps in determining the number of employees needed.

• It indicates the efficiency of resource usage and helps in cost management.

• It shows the total revenue generated by the business.

• It helps in setting the price of the products.

How is Capacity Utilisation calculated?

Which of the following is a factor affecting Capacity Utilisation?

• The colour of the product.

• The location of the business.

• The level of demand for the product.

• The number of competitors in the market.

If a factory has a maximum capacity of 2,000 units per month and is currently producing 1,700 units, what is its Capacity Utilisation rate?

• 50%

• 85%

• 100%

• 90%

Which of the following is an example of high Capacity Utilisation?

• A restaurant that is fully booked every night.

• A factory that produces 500 units out of a possible 1,000 units.

• A school that has empty classrooms.

• A car park that is half full.

What could be a consequence of operating at full Capacity Utilisation for an extended period?

• Increased employee satisfaction.

• Reduced wear and tear on machinery.

• Increased risk of breakdowns and employee burnout.

• Decreased production costs.

Which of the following is NOT a factor that can cause capacity to change over time?

• Seasonal demand.

• Operational improvements.

• Market demand.

• Company logo design.

A company operating at over 91% of its capacity is experiencing ________ utilisation, which can strain resources, increase costs, and reduce flexibility.

A production line is designed to produce a maximum of 2,000 units per day. On a certain day, it produced 1,860 units. Calculate the capacity utilisation percentage.

• 85%

• 95%

• 70%

• 93%