Which of the Following Is True of Master-Budget Capacity Utilization

question 94

Multiple Choice

Which of the following is true of master-budget capacity utilization?

• A) It hides the amount of unused capacity.
• B) It represents the maximum units of production intended for current capacity.
• C) It provides the best cost estimate for benchmarking purposes.
• D) It is an average that provides no meaningful feedback to a firm's marketing manager for a particular year.

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Definitions:

Divisional Segment Margin

The profit margin achieved by a specific division or segment of a company, indicating the profitability of that division.

Net Operating Income

The profit derived from a company's regular business operations, excluding deductions for interest and taxes.

Variable Costing

An approach in accounting where only direct materials, direct labor, and variable manufacturing overhead costs are considered in calculating the cost of products.

Net Operating Income

The total profit of a company after operating expenses are deducted, but before interests and taxes are subtracted.