Variance in Planned Capacity Expenditures and Cost of Underutilized Capacity

question 8

True/False

Variance in planned capacity expenditures and cost of underutilized capacity are two financial measures of managing capacity.

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Definitions:

MR

An abbreviation for Marginal Revenue, which refers to the additional revenue earned by selling one more unit of a good or service.

MC

Stands for Marginal Cost, which is the increase in total cost that arises from producing one additional unit of a good or service.

Product Differentiation

A marketing strategy that involves distinguishing a product or service from others, to make it more attractive to a particular target market.

Marginal Revenue

The increase in earnings a business gets by selling one extra unit of its goods or services.