The difference between master budget capacity and practical capacity is considered as ________?
Correct answer: C. planned unused capacity
- A. normal used capacity
- B. unplanned and unused capacity
- C. planned unused capacity
- D. unplanned used capacity
Explanation
Practical capacity exceeds the activity planned in the master budget; their difference is the capacity deliberately left unused in the plan. This is therefore planned unused capacity.
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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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