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ACCA Strategic Professional · Advanced Performance Management · Performance optimisation in specific contexts

Kestrel Legal operates with 40 fee-earners available for 1,800 chargeable hours each per year. Actual chargeable hours were 54,000. Which measure and result correctly show its capacity utilisation, and what does the result suggest?

Utilisation is 75%, being 54,000 actual chargeable hours divided by 72,000 available hours. A quarter of capacity went unused, and because services are perishable that lost capacity cannot be stored for later sale.

  1. A75%, indicating that a quarter of available capacity perished unusedCorrect
  2. B60%, indicating that capacity is over-used
  3. C75%, indicating that capacity is fully used
  4. D133%, indicating excess demand

Explanation

Available hours are 40 x 1,800 = 72,000. Utilisation is 54,000/72,000 = 75%. Unused service capacity cannot be stored, so 25% has perished. 60% would result from using the wrong base.

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