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Paper 2 · November 2018 · Financial Statements and Ratios

An Operations Manager wants to improve capacity utilisation without buying new machinery. Which of the following actions would achieve this?

ASubcontracting some of the excess production work to another producer.
BReducing the number of quality control checks performed on finished output.
CIncreasing the selling price charged for every unit produced.
DReducing the number of supervisors employed on the factory floor.

Explanation

Subcontracting excess work to another producer allows the manufacturer's existing capacity to be used more fully for its own core output, raising capacity utilisation. Cutting quality checks, raising prices or reducing supervisors do not increase the proportion of capacity actually being used.

Derived from ZIMSEC Business_studies Paper 2, November 2018, Q5

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