Which of the Following Forms of Capacity Can Only Be

question 21

Multiple Choice

Which of the following forms of capacity can only be determined AFTER the completion of activities?

• A)Demonstrated capacity
• B)Maximum capacity
• C)Design capacity
• D)Effective capacity

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Definitions:

Absorption Costing

A method of inventory costing that includes all manufacturing costs, both variable and fixed, in the cost of a product.

Variable Costing

An accounting method that only considers variable costs in determining the cost of goods sold and in calculating contribution margin.

Unit Product Cost

The total expense incurred to produce, store, and sell one unit of a product, including direct materials, direct labor, and manufacturing overhead.

Variable Costing

An accounting method in which costs that vary directly with the level of production output are charged to product units.