Lesson 2.4.2
2.4.2 Capacity utilisation Quiz: Pearson Edexcel Business, Unit 2
20 questions
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Lesson 2.4.2, Capacity utilisation: 20 multiple choice questions for the Pearson Edexcel Business (9BS0), Unit 2: Managing business activities, written with Revision Ninja.
Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.
The 20 questions
-
Which calculation gives a firm's capacity utilisation percentage?
- (Profit / output) x 100
- (Maximum / actual) x 100
- (Actual / maximum) x 100
- (Revenue / costs) x 100
-
A factory can produce 10,000 units a month but currently produces 7,500 units. What is its capacity utilisation?
- 133%
- 7,500%
- 75%
- 25%
-
A firm operating at 95% capacity utilisation is experiencing which operational state?
- Significant spare capacity
- Low capacity utilisation
- Diseconomies of scale
- High capacity utilisation
-
What is a major financial drawback of under-utilising capacity?
- Lower fixed costs
- Higher profit margins
- Higher average costs
- Machine breakdown risks
-
What operational risk is caused by operating above 100% capacity utilisation?
- Higher fixed costs
- Equipment breakdowns
- Low worker stress
- Excess buffer stock
-
Which action directly helps a business to increase its capacity utilisation?
- Increasing maximum capacity
- Generating new orders
- Purchasing new machinery
- Reducing working hours
-
A factory's current output is 4,000 units against a maximum of 5,000 units. What is the spare capacity?
- 4,000 units
- 1,000 units
- 20%
- 5,000 units
-
Why might a business intentionally maintain spare capacity?
- To maintain flexibility
- To lower prices
- To reduce demand
- To maximise costs
-
Which scenario indicates that a factory is over-utilising its capacity?
- Excess stock
- Unused machinery
- Redundant workers
- Mandatory staff overtime
-
A business with capacity utilisation of 50% and fixed costs of £100,000 has an output of 5,000 units. What is its maximum possible output?
- 10,000 units
- 2,500 units
- 100,000 units
- 5,000 units
-
What happens to average fixed costs when capacity utilisation falls?
- They vanish
- They remain unchanged
- They increase
- They decrease
-
How can a firm increase capacity utilisation without investing in new machinery?
- Subcontracting production
- Buying faster machinery
- Building new factories
- Introducing extra shifts
-
If maximum output is 8,000 units and actual output is 4,800 units, what is capacity utilisation?
- 75%
- 62.5%
- 60%
- 40%
-
What does capacity utilisation measure for operational managers?
- Product market share
- Resource usage efficiency
- Net profit margin
- Employee turnover rate
-
How can a business improve low capacity utilisation?
- Increase buffer stock
- Rationalise capacity
- Extend lead times
- Raise prices
-
What is a main risk of operating at 100% capacity utilisation?
- Holding excess stock
- High unit costs
- Unmet demand surges
- Excess idle machinery
-
Total fixed costs are £60,000. What is the fixed cost per unit when output is 7,800 units?
- £10.00
- £7.80
- £7.69
- £6.00
-
A factory has capacity utilisation of 60% and a maximum output of 25,000 units. What is its current output?
- 41,667 units
- 10,000 units
- 15,000 units
- 25,000 units
-
Which action directly reduces over-utilisation of factory machinery?
- Holding buffer stock
- Increasing order volume
- Buying extra machinery
- Extending lead times
-
Total fixed costs are £45,000. When output falls from 9,000 to 6,000 units, unit fixed cost rises by:
- £5.00
- £7.50
- £2.50
- £1.50
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