Normally, Standard Costs Should Be Revised When Labor Rates Change

question 87

True/False

Normally, standard costs should be revised when labor rates change to incorporate new union contracts.

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Definitions:

Design Capacity

The maximum output that a facility or process is designed to achieve under specific conditions.

Effective Capacity

The maximum output level that a facility can realistically achieve under normal operating conditions and constraints.

Utilization

The degree to which a capacity, resource, or system is being used effectively to produce goods or services.