Practical capacity
A)typically leads to an unusually large, unfavorable fixed-MOH volume variance.
B)will lead to an unfavorable fixed MOH volume variance if actual production exceeds planned practical capacity.
C)will lead to a fixed MOH rate that will fluctuate with demand changes.
D)will lead to an unfavorable fixed MOH volume variance if actual production does not meet planned practical capacity.

Question

Quizplus · Accepted Answer

Practical capacity is the maximum output that can be achieved under normal working conditions. If actual production does not meet this capacity, it results in an unfavorable fixed manufacturing overhead (MOH) volume variance because the fixed costs are spread over fewer units than planned.

Practical Capacity