The Maximum Output That a Process or Facility Can Achieve

question 37

Multiple Choice

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

• A) throughput time.
• B) utilization.
• C) effective capacity.
• D) peak capacity.

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Definitions:

Underapplied Overhead

Occurs when the allocated manufacturing overhead cost is less than the actual overhead incurred, leading to under-recovered expenses.

Manufacturing Overhead

This includes all the indirect costs associated with manufacturing a product, such as utilities, indirect labor, and maintenance of equipment.

Manufacturing Overhead Applied

The process of assigning manufacturing overhead costs to the units produced, based on a predetermined overhead rate.

Work in Process Account

An inventory account that tracks the costs of products in various stages of completion but not yet finished.