All the following are true regarding theoretical capacity except:
A)Theoretical capacity results in the lowest product cost.
B)Theoretical capacity results in the lowest budgeted fixed MOH rate.
C)Theoretical capacity usually gives unrealistic targets, which demotivates employees.
D) Theoretical capacity results in the highest fixed MOH rate.

Question

Quizplus · Accepted Answer

Theoretical capacity results in the lowest fixed MOH rate because it assumes maximum possible output, spreading fixed costs over a larger number of units.

All the Following Are True Regarding Theoretical Capacity Except