Cambridge International A Level · Business (9609)

Capacity utilisation and outsourcing: Practice Questions

5 multiple-choice questions marked as you go, and 4 written questions with worked solutions. All on Capacity utilisation and outsourcing.

9 questions20 marksFree, no account

Question 1

1 mark

Which of the following describes a situation where a business is operating over its maximum capacity?

Question 2

1 mark

A business decides to outsource its manufacturing to a specialist provider in a different country to benefit from lower labour costs.

Which of the following is a non-financial risk associated with this decision?

Question 3

1 mark

A clothing retailer faces a sudden, temporary spike in demand due to a viral social media trend. Which combination of actions would most likely allow the retailer to meet this demand without increasing its long-term fixed costs?

Question 4

1 mark

What is the primary definition of outsourcing?

Question 5

1 mark

A manufacturing plant has a maximum productive capacity of \(15,000\) units per month. Due to a mechanical failure in the production line, the plant produced only \(10,500\) units this month.

What is the capacity utilisation of the plant for this month?

Question 6

2 marks

State the formula used to calculate capacity utilisation for a business.

Write your answer out first, then check it against the worked solution.

Question 7

3 marks

A factory has a maximum production capacity of \(2,000\) units per month but is currently producing \(1,700\) units. Calculate its capacity utilisation and explain one potential disadvantage of operating at this level.

Write your answer out first, then check it against the worked solution.

Question 8

5 marks

Evaluate why a business might experience a decline in its long-term brand image as a result of outsourcing its core production activities to a third-party provider.

Write your answer out first, then check it against the worked solution.

Question 9

5 marks

A furniture manufacturing company, 'WoodCraft', has a maximum production capacity of 500 chairs per week. It is currently operating at 60% capacity utilisation.

(a) Calculate WoodCraft's current weekly output.

(b) Explain two methods WoodCraft could use to improve its capacity utilisation and discuss the potential impact of these methods on the business.

Write your answer out first, then check it against the worked solution.

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