An amount of available capacity other than employed capacity, to meet the customer's demand, is classified as _________?
Correct answer: D. unused capacity
- A. targeted capacity
- B. budgeted capacity
- C. recovery capacity
- D. unused capacity
Explanation
Unused capacity is the available capacity that is not currently employed and can potentially be used to meet additional customer demand. Budgeted or targeted capacity refers to planned levels, not necessarily the unutilized portion.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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