Answer the Following Question(s)using the Information Below

question 47

Multiple Choice

Answer the following question(s) using the information below.A manufacturing firm is able to produce 2,000 pairs of shoes per hour, at maximum efficiency.There are three eight-hour shifts each day.Production is actually 1,600 pairs of shoes per hour due to unavoidable operating interruptions.The plant is expected to run every day but was only able to operate for 27 days in September.
-________ provides the denominator-level capacity based on demand for more than one budget cycle.

• A)Practical capacity
• B)Theoretical capacity
• C)Master-budget capacity utilization
• D)Normal capacity utilization
• E)Supply capacity

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Definitions:

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities without relying on the sale of inventory.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Gross Margin Percentage

A financial metric that represents the portion of sales revenue that exceeds the cost of goods sold, expressed as a percentage.

Net Income

The total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue.