Which of the Following Capacity Levels Do Proponents of Activity-Based

question 145

Multiple Choice

Which of the following capacity levels do proponents of activity-based costing recommend to be used as the denominator level to calculate activity cost rates?

• A) practical capacity
• B) normal capacity utilization
• C) theoretical capacity
• D) master-budget capacity utilization

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Definitions:

Strategic And Planning Decisions

High-level decisions that shape the overall direction and objectives of an organization, involving long-term planning and allocation of resources.

Production Forecasts

Predictions about the quantity of products a company needs to produce in future periods based on expected demand.

Aggregate Forecasts

Predictions of future demand for a product or service over a specific period, compiled from individual forecasts at a more general or combined level.

Disaggregate Forecasts

Involve breaking down aggregate forecasts into more detailed and specific forecasts, often by product, location, or time period.