By selecting the practical capacity concept,management recognises that the cost of capacity is represented by the cost of supplying the capacity,regardless of the demand for it.

Question

Quizplus · Accepted Answer

The practical capacity concept recognises that capacity costs are incurred regardless of the demand for it. Therefore, the cost of capacity is represented by the cost of supplying the capacity, which includes fixed costs, such as depreciation and maintenance, and variable costs, such as energy and materials.

By Selecting the Practical Capacity Concept,management Recognises That the Cost