Theoretical capacity
A)results in lower, more attainable production expectations based on existing capacity.
B)results in the lowest budgeted fixed MOH rate.
C)results in a higher fixed MOH rate than the normal capacity.
D)results in the highest fixed MOH rate.

Question

Quizplus · Accepted Answer

Theoretical capacity assumes maximum efficiency with no downtime, leading to the lowest budgeted fixed manufacturing overhead (MOH) rate because the fixed costs are spread over the largest possible number of units.

Theoretical Capacity