The cost of producing a single unit of output.
Formula to calculate Unit Cost =
Total Cost divided by Units of Output.
Capacity:
The maximum output that a business is capable
of producing with existing resources.
Capacity Utilisation:
A measurement of the extent to which a business
is using the capacity available to it.
Capacity Utilisation = Actual Output x 100
Maximum Output
How are Ryanair Planning to increase capacity?
An interview with the Chief Executive of Ryanair:
Maximum Output
How are Ryanair Planning to increase capacity?
An interview with the Chief Executive of Ryanair:
Under-Utilisation of Capacity (Excess Capacity):
Where a business is not using their resources to
their full potential e.g. unused factory space.
Capacity Shortage:
Where a business has insufficient resources to
fully meet the demands of its customers.
Rationalisation:
Reducing the productive capacity of a business in
an effort to increase levels of efficiency.
Subcontracting:
The passing on of a unit of work to another firm
outside of the business.
Non-Standard Orders (Special Order Decision):
Where a business has to decide whether to
accept orders at a price different from that
usually charged.
Often a one-off request.
Often a one-off request.
