Which of the Following Short-Term Decisions Deal with Excess Capacity

question 31

Multiple Choice

Which of the following short-term decisions deal with excess capacity?

• A)Special order.
• B)Product mix.
• C)Make or buy.
• D)Increasing prices.

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Definitions:

Cost Method

An accounting approach whereby investments are recorded at their original purchase cost, without adjusting for changes in fair value, except for impairments.

Investment

The allocation of resources, such as capital or time, in the expectation of generating an income or profit.

CICA Handbook

The Canadian Institute of Chartered Accountants Handbook, which contains accounting and assurance standards in Canada.

Capitalize

To record a cost as a long-term asset rather than an expense, spreading the cost over its useful life.