Excess Capacity Is Always Better for the Business Than Too

question 72

True/False

Excess capacity is always better for the business than too little capacity.

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels.

Direct Materials Quantity Variance

The difference between the actual quantity of direct materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.

Direct Material Price Variance

The difference between the actual cost of direct materials and the standard cost multiplied by the quantity purchased, used in variance analysis for cost control.

Actual Price Per Pound

The real cost of a commodity or material expressed on a per pound basis.