________ is (are)based on the demand for the output of the plant.
A)Practical capacity
B)Master-budget capacity utilization
C)Normal capacity utilization
D)Both B and C are correct.

Question

Quizplus · Accepted Answer

Master-budget capacity utilization and normal capacity utilization are both based on the demand for the output of the plant. Master-budget capacity utilization refers to the amount of capacity that is expected to be used in the budgeted period, based on forecasted sales and production. Normal capacity utilization is the amount of capacity that is expected to be used over the long term, taking into account expected fluctuations in demand. Therefore, both options B and C are correct. Option A (practical capacity) is not directly linked to demand, but rather refers to the maximum amount of output that can be produced based on the physical limitations of the plant and equipment.

________ Is (Are)based on the Demand for the Output of the Plant