capacity utilisation

Question 1

capacity utilisation

Answer 1

measure of the level to which a businesses assets are being used to produce output

Question 2

capacity utilisation formula

Answer 2

current output / maximum possible output x 100

Question 3

ways of improving capacity utilisation

Answer 3

• increase sales as it requires more units to be produced (spending increases)
• encourages sales when demand is lower (prices need to be decreases)
• Reducing its overall capacity will improve the level of capacity utilisation
  Capacity can be reduced by selling capital equipment or reducing staff numbers