Which of the following capacity levels do proponents of activity-based costing recommend to be used as the denominator level to calculate activity cost rates?
A) practical capacity
B) normal capacity utilization
C) theoretical capacity
D) master-budget capacity utilization

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) proponents recommend using practical capacity as the denominator level for calculating activity cost rates because it reflects the maximum amount of work that can be done while considering unavoidable interruptions, thus providing a more accurate basis for allocating costs.

Which of the Following Capacity Levels Do Proponents of Activity-Based