Capacity management, denominator-level capacity concepts. Match each of the following numbered descriptions with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical capacity c. Normal capacity utilization d. Master-budget capacity utilization 1. Measures the denominator level in terms of what a plant can supply 2. Is based on producing at full efficiency all the time 3. Represents the expected level of capacity utilization for the next budget period 4. Measures the denominator level in terms of demand for the output of the plant 5. Takes into account seasonal, cyclical, and trend factors 6. Should be used for performance evaluation in the current year 7. Represents an ideal benchmark 8. Highlights the cost of capacity acquired but not used 9. Should be used for long-term pricing purposes 10. Hides the cost of capacity acquired but not used 11. If used as the denominator-level concept, would avoid the restatement of unit costs when expected demand levels change
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Capacity management, denominator-level capacity concepts. Match each of the following numbered descriptions with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical capacity c. Normal capacity utilization d. Master-budget capacity utilization 1. Measures the denominator level in terms of what a plant can supply 2. Is based on producing at full efficiency all the time 3. Represents the expected level of capacity utilization for the next budget period 4. Measures the denominator level in terms of demand for the output of the plant 5. Takes into account seasonal, cyclical, and trend factors 6. Should be used for performance evaluation in the current year 7. Represents an ideal benchmark 8. Highlights the cost of capacity acquired but not used 9. Should be used for long-term pricing purposes 10. Hides the cost of capacity acquired but not used 11. If used as the denominator-level concept, would avoid the restatement of unit costs when expected demand levels change
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