If the capacity utilization and its cost are fixed in product costing, the capacity management is ___________?
Correct answer: A. for short run
- A. for short run
- B. for long run
- C. for one day
- D. for few days
Explanation
Holding capacity utilization and its cost constant is a short-run assumption because capacity cannot normally be changed immediately. Long-run capacity decisions allow changes in plant, equipment, and operating scale.
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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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