Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 9 - Inventory Costing and Capacity Analysis - Assignment Material - Questions - Page 358: 9-15

Answer

No, the difference between practical capacity and master-budget capacity utilization doesn't provide the best measure of balancing capacity costs. This is because the costs involved go beyond just having too much or too little capacity; they also include potential lost revenue and the capital tied up in plant assets.

Work Step by Step

No, the difference between practical capacity and master-budget capacity utilization doesn't provide the best measure of balancing capacity costs. This is because the costs involved go beyond just having too much or too little capacity; they also include potential lost revenue and the capital tied up in plant assets.
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