Kecks Bottling Company produces 2-liter soda bottles in its Somerset plant using an injection-molding machine that has a theoretical capacity of 60,480 bottles per week. For the most recently completed week, the company's capacity cost management system reported an efficiency waste variance of 3,144 bottles. This variance indicates that:
A) Practical capacity exceeded theoretical capacity for the week.
B) Actual capacity used fell short of budgeted capacity.
C) Budgeted capacity exceeded normal capacity.
D) Normal capacity exceeded practical capacity.

Question

Quizplus · Accepted Answer

The efficiency waste variance indicates that the actual production was less than the theoretical or budgeted capacity, meaning the company did not utilize its full capacity, hence actual capacity used fell short of budgeted capacity.

Kecks Bottling Company Produces 2-Liter Soda Bottles in Its Somerset