Practical capacity is based on which of the following assumptions?
A)that absorption costing is used
B)that variable costing is used
C)Production will occur at peak efficiency all the time.
D)Production will occur at peak capacity where feasible (e. g., except for maintenance downtime, repairs, holidays, etc.).
E)Production can never occur at peak capacity.

Question

Quizplus · Accepted Answer

Practical capacity assumes that production will occur at peak capacity where feasible, taking into account factors such as maintenance downtime, repairs, holidays, etc. This is different from theoretical capacity, which assumes production will occur at maximum output without any consideration for these factors. The other choices (A, B, C, and E) do not relate specifically to the assumptions behind practical capacity.

Practical Capacity Is Based on Which of the Following Assumptions