Theoretical capacity:
A)represents real capacity available to the company
B)provides the best perspective of actual long-run costs
C)when used for product costing results in the lowest cost estimate of the four capacity options
D)replicates the cost of capacity in a competitor's cost structure

Question

Quizplus · Accepted Answer

Theoretical capacity assumes 100% efficiency with no downtime or interruptions, leading to the lowest cost estimate as it maximizes output over fixed costs.

Theoretical Capacity