analysing operational performance

Question 1

what are unit costs?

Answer 1

cost of producing 1 unit or 1 item

Question 2

what’s capacity?

Answer 2

the maximum output a business can produce with its current resources

Question 3

what is capacity utilisation?

Answer 3

this measures the percentage of a firms capacity that is actually being used

Question 4

what’s labour productivity?

Answer 4

measures the amount of goods produced in relation to the number of employees- shown in terms of output per worker

Question 5

how can under-utilisation of capacity be solved?

Answer 5

boosting sales

Question 6

what is an advantage of high capacity utilisation?

Answer 6

keeps unit costs down as machinery and staff are being used productively

Question 7

a company sold 40,000 units last month and expects to sell 45,000 this month. the factory is capable of producing 60,000 units a month. what’s it’s capacity utilisation this month?

Answer 7

60,000

X 100 = 75 %