Cambridge A Level Business 9609
Capacity utilisation and outsourcing
Capacity utilisation is how much of its maximum possible output a business is actually producing; running well below capacity wastes fixed costs, running at or above it strains people and machines, and outsourcing is one way to move between the two.
The link examiners look for is fixed costs. The same rent and machinery spread over more units makes each unit cheaper — which is why utilisation matters to profit, and why neither 50% nor 100% is the right answer.
Updated 1 October 2026
How much it is worth
Capacity utilisation and outsourcing: 70 marks across 36 real Cambridge 9609 AS papers — 3.9% of the total, on 13 of the 36. How that ranks against every other 9609 topic →
Measuring capacity utilisation
capacity utilisation (%) = current output ÷ maximum possible output × 100
Maximum possible output is what the business could produce with its existing resources — its premises, machines and workforce — in the period.
Worked example
Worked example
A printing firm can print 2 million brochures a year. This year it printed 1.5 million, and its fixed costs are $600 000. Calculate capacity utilisation, and the fixed cost per brochure now and at full capacity.
Utilisation = 1 500 000 ÷ 2 000 000 × 100 = 75%.
Fixed cost per brochure now = $600 000 ÷ 1 500 000 = $0.40; at full capacity = $600 000 ÷ 2 000 000 = $0.30.
Each brochure carries a third more fixed cost than it would at full capacity — that gap is why utilisation matters to profit, and the case for winning more work is strong. But the spare quarter is also what lets the firm accept a rush order or service its presses without stopping; a push all the way to 100% would give that up.
Operating below capacity
Spare capacity means fixed costs spread over fewer units — a higher cost per unit — plus idle machines and workers, possible low morale and job insecurity, and an image problem if customers notice. Its upside is flexibility: the business can take a sudden large order, maintain machines without stopping, and grow without investing.
Operating at or over capacity
Near full capacity, unit costs are at their lowest — but staff work overtime and under stress, machines go unmaintained and break down, quality slips, delivery dates are missed and new orders have to be turned away. Over capacity can only be sustained briefly. Persistent high utilisation is a signal to invest in more capacity or to outsource.
Improving capacity utilisation
- Raise output to fill the capacity — more promotion, new markets, lower prices, or producing for other firms (subcontracting in).
- Reduce capacity to match demand — rationalisation: closing a site, selling machines, cutting shifts. Lowers fixed costs, but with redundancy costs and less flexibility if demand recovers.
- Use existing capacity better — better maintenance, scheduling and labour productivity.
The right choice depends on whether low demand is temporary or permanent — a judgement the case usually lets you make.
Outsourcing
Outsourcing is using another business to carry out an activity the business could do itself — manufacturing, delivery, payroll, IT, customer service.
| Benefits | Drawbacks |
|---|---|
| Lower costs where the specialist has scale or cheaper labour | Less control over quality and delivery |
| Extra capacity without investment — respond to a demand surge quickly | Dependence on the supplier; disruption if it fails |
| Access to specialist expertise and equipment | Confidentiality and reputation risks |
| Management can focus on the core business | Communication problems, especially across countries |
| Fixed costs become variable costs | Redundancies and morale effects among existing staff |
Whether outsourcing suits a business depends on whether the activity is core to its reputation. A brand known for hand-made quality outsourcing its making risks the very thing customers pay for; outsourcing its deliveries rarely does.
How Cambridge asks it
On the 36 AS papers Quanta holds, 15 question parts test capacity utilisation and outsourcing, on 13 of the papers (8 on Paper 1, 7 on Paper 2). The command words they open with:
- Analyse × 7
- Explain × 4
- Calculate × 2
- Define × 1
- Evaluate × 1
By tariff — each size has its own technique:
- 1 × 2-mark, 6 × 3-mark, 6 × 5-markShort-answer questions (2, 3 and 5 marks) →
- 1 × 8-mark8-mark 'analyse' questions →
- 1 × 12-mark12-mark 'evaluate' questions →
Terms candidates have been asked to define or explain on this topic:
outsourcing ×2
Common mistakes
1.Capacity utilisation divided the wrong way round
Current output ÷ maximum output × 100. The answer is never above 100% in normal operation.
2.Treating 100% as the goal
Very high utilisation leaves no room for maintenance or new orders. Argue the trade-off.
3.Missing the fixed-cost link
The reason utilisation affects cost is fixed costs spread over more or fewer units — say it.
4.Outsourcing assumed to cut costs every time
Supplier margins, transport and control problems can make it dearer. Weigh it in context.
Common questions
How do you calculate capacity utilisation?
Current output divided by maximum possible output, multiplied by 100. Printing 1.5 million brochures with capacity for 2 million is 75%.
Why does capacity utilisation affect unit costs?
Fixed costs stay the same whatever the output, so producing more spreads them over more units and lowers the cost of each.
What are the disadvantages of operating at full capacity?
Overworked staff, no time for maintenance, more breakdowns and mistakes, falling quality, and no room to accept new orders.
What is outsourcing?
Using another business to carry out an activity the business could do itself, such as manufacturing, delivery or IT.
Capacity utilisation and outsourcing on real papers
The papers that leaned on it hardest, as a share of the paper. Each one has its own page on Quanta with the full topic breakdown:
Every 9609 past-paper question on capacity utilisation and outsourcing
15 questions across 13 papers, 70 marks in all, newest first. Open a paper to sit it on Quanta and have these questions marked.
| Paper | Question (marks) |
|---|---|
| 9609/12/M/J/26 | Q4 (5) |
| 9609/23/M/J/26 | Q2(b)(i) (3), Q2(b)(ii) (3) |
| 9609/12/F/M/26 | Q3(b) (3) |
| 9609/13/O/N/25 | Q4 (5) |
| 9609/21/O/N/25 | Q2(d) (12) |
| 9609/22/O/N/25 | Q2(a)(ii) (3) |
| 9609/21/M/J/25 | Q1(b)(i) (3), Q1(b)(ii) (3) |
| 9609/11/O/N/24 | Q4 (5) |
| 9609/13/O/N/24 | Q4 (5) |
| 9609/22/O/N/24 | Q1(c) (8) |
| 9609/11/M/J/24 | Q1(a) (2) |
| 9609/13/M/J/24 | Q4 (5) |
| 9609/12/F/M/24 | Q4 (5) |
Practise capacity utilisation and outsourcing against real mark schemes
Quanta has real Cambridge A Level Business 9609 past-paper questions, with the case study beside the answer boxes, every answer marked automatically against the published mark scheme objective by objective, and the reasoning shown — and it tracks which skills you’re missing. Free for individual students.
Start practising free