Capacity management, denominator-level capacity concepts. Match each of the following numbered descriptions with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical capacity c. Normal capacity utilization d. Master-budget capacity utilization 1. Measures the denominator level in terms of what a plant can supply 2. Is based on producing at full efficiency all the time 3. Represents the expected level of capacity utilization for the next budget period 4. Measures the denominator level in terms of demand for the output of the plant 5. Takes into account seasonal, cyclical, and trend factors 6. Should be used for performance evaluation in the current year 7. Represents an ideal benchmark 8. Highlights the cost of capacity acquired but not used 9. Should be used for long-term pricing purposes 10. Hides the cost of capacity acquired but not used 11. If used as the denominator-level concept, would avoid the restatement of unit costs when expected demand levels change

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 31P: The actions listed next are associated with either an activity-based operational control system or a...
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Capacity management, denominator-level capacity concepts. Match each of the following numbered descriptions with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical capacity c. Normal capacity utilization d. Master-budget capacity utilization 1. Measures the denominator level in terms of what a plant can supply 2. Is based on producing at full efficiency all the time 3. Represents the expected level of capacity utilization for the next budget period 4. Measures the denominator level in terms of demand for the output of the plant 5. Takes into account seasonal, cyclical, and trend factors 6. Should be used for performance evaluation in the current year 7. Represents an ideal benchmark 8. Highlights the cost of capacity acquired but not used 9. Should be used for long-term pricing purposes 10. Hides the cost of capacity acquired but not used 11. If used as the denominator-level concept, would avoid the restatement of unit costs when expected demand levels change

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