________ is based on the level of capacity utilization that satisfies average customer demand over periods generally longer than one year.
A) Practical capacity
B) Theoretical capacity
C) Master-budget capacity utilization
D) Normal capacity utilization

Question

Quizplus · Accepted Answer

Normal capacity utilization is the level of capacity utilization that satisfies average customer demand over periods generally longer than one year. It takes into account the possibility of seasonal variations in demand and allows for normal machine downtime, maintenance, and repairs. Practical capacity is the maximum possible output given equipment reliability, maintenance, and engineering judgments. Theoretical capacity is the maximum possible output assuming 100% efficiency and no breakdowns or stoppages. Master-budget capacity utilization is the level of capacity utilization that is expected to result from the budgeted level of production for the period.

________ Is Based on the Level of Capacity Utilization That