Which of the Following Is True of Normal Capacity Utilization

question 160

Multiple Choice

Which of the following is true of normal capacity utilization?

• A) It will be less than the real capacity available to a company.
• B) It can result in setting selling prices that are not competitive.
• C) It results in the lowest cost estimate of the four capacity options when used for product costing.
• D) It represents the maximum units of production intended for current capacity.

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Definitions:

Implicit Favorites

Refers to the subconscious preferences or biases that individuals may have towards certain options or people without consciously realizing it.

Limited Information Processing

A situation where the ability to interpret, analyze, and act upon information is constrained by cognitive or situational factors.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution.

Tacit Knowledge

Knowledge gained through personal experience and context, often difficult to articulate or transfer to others, as opposed to explicit knowledge which can be readily documented.