Unused capacity should be treated as a general cost to be shared across all product lines.

Question

Quizplus · Accepted Answer

In general, unused capacity is not assigned to product lines. However, if the capacity was acquired to meet anticipated demands from a particular customer or a particular market segment, the costs of unused capacity due to lower-than-expected demands can be assigned to the person or organizational unit responsible for that customer or segment. Such an assignment is done on a lump-sum basis to the organizational unit; it should not be driven down to the products actually produced during the period in the unit.

Unused Capacity Should Be Treated as a General Cost to Be