The capacity utilization of the business, to satisfy average customer demand over a specific period of time is classified as ____________?
Correct answer: C. normal capacity utilization
- A. seasonal capacity utilization
- B. standard capacity utilization
- C. normal capacity utilization
- D. theoretical capacity utilization
Explanation
Normal capacity is based on the average customer demand expected over a representative period, including ordinary fluctuations in activity. Theoretical capacity assumes uninterrupted maximum production and is therefore different.
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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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