Which One of the Following Statements About Capacity Is Best

question 28

Multiple Choice

Which one of the following statements about capacity is best?

• A) Short- term capacity plans deal with investments in new facilities and equipment.
• B) Capacity is the average rate of output for a facility.
• C) A line flow process usually measures its capacity in terms of output rates.
• D) The utilization rate is expressed as the ratio of maximum output rate to capacity.

Understand and calculate days' sales in work in process inventory.

Understand and calculate work in process inventory based on given days' sales.

Understand the lean business model and its application beyond manufacturing.

Understand how days' payable outstanding is calculated and interpreted.

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Definitions:

Net Income

The company's earnings following the deduction of all costs, taxes, and expenses from the overall income.

FVTOCI Investments

Financial assets classified as fair value through other comprehensive income; adjustments to their fair value don't affect profit or loss but other comprehensive income.

IFRS 9

An International Financial Reporting Standard that deals with the accounting for financial instruments, covering the classification, measurement, and recognition of financial assets and liabilities.

Accumulated Other Comprehensive Income

Represents the total of all unrealized gains and losses that are not included in net income but affect shareholders' equity.