Which One of the Following Statements Concerning Capacity Cushions Is

question 67

Multiple Choice

Which one of the following statements concerning capacity cushions is best?

• A)Large capacity cushions are used more often when future demand is level and known.
• B)Small capacity cushions are used extensively in capital intensive firms.
• C)Capacity cushions are used primarily in manufacturing organizations,not in service organizations.
• D)Small cushions are used in organizations where the products and services produced often change.

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Definitions:

Current Profits

The amount of net income that a company has generated during the current fiscal period, reflecting its financial performance in the short term.

Production

The process of creating, manufacturing, or assembling goods and services.

Absorption Costing

A method of inventory costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Unit Product Cost

The total cost incurred to produce, store, and sell one unit of a product, including direct materials, labor, and overhead.