What is capacity utilization rate? Why this concept is important for management of resources of the organization?

The capacity utilization rate measures the proportion of the potential economic output which has realized, and it is important for management of resources of the enterprise because it indicates the slack of the planned output at a certain time.it is a key economic indicator when applied to aggregate productive capacity, so we can increase the productivity without increasing the resources  

Capacity utilization rate is directly linked with man days which play major role in project costing and successful execution of the project.

Capacity utilization rate gives an idea about how a company resources are used. It can be calculated by using formula " Actual output / Potential output X 100. Since quantifying services provided is more difficult, this rate is more suitably applied to companies manufacturing good or products. But owing to many problems associated with the man & machine, capacity utilization rate can not go up to 100% .

Increase or decrease in Capacity utilization rate , at times taken as an index of market economic condition. 

The capacity utilization rate measures the proportion of potential economic output that is actually realized. Displayed as a percentage, capacity utilization levels give insight into the overall slack that is in the economy or a firm at a given point in time. It is calculated as (Actual Output / Potential Output) multiplied by.

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