The Biggest Advantage of Using Practical Capacity to Allocate Costs

question 7

Multiple Choice

The biggest advantage of using practical capacity to allocate costs is that it:

• A)is a value that is readily available
• B)never causes over or under-allocated overhead
• C)burdens the user divisions with the costs of unused capacity
• D)focuses management's attention on unused capacity

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Definitions:

Maturity Phase

The stage in a product's lifecycle or a company's growth where sales growth slows or stabilizes as the market becomes saturated.

Capital Intensity

The amount of fixed or real capital present in relation to other factors of production, particularly labor.

Overlapping Demand

A situation where consumers' needs and desires partially coincide, leading to products or services being desired by multiple market segments.

Economic Background

The set of conditions including historical, geographical, and cultural factors that influence the economic activities and outcomes of a person or entity.