The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized is?
A) Capacity
B) Capacity utilization rate
C) Strategic capacity planning
D) Economies of scale
E) Best operating level

Question

Quizplus · Accepted Answer

The volume of output at which average unit cost is minimized is known as the best operating level. This level helps in achieving economies of scale as production volume increases, thus reducing the average cost by distributing fixed costs over more units. Therefore, the answer is E, Best operating level.

The Level of Capacity for Which the Process Was Designed