The use of theoretical capacity results in an unrealistically low fixed manufacturing cost per unit because it is based on ________.
A) real available capacity
B) an unattainable and idealistic level of capacity
C) normal capacity utilization
D) normal costing

Question

Quizplus · Accepted Answer

Theoretical capacity is based on an unattainable and idealistic level of capacity, assuming that the machinery is operating at full efficiency without any downtime or delays. As a result, the fixed manufacturing cost per unit calculated using theoretical capacity is lower than it would be in reality, making it an unrealistic measure.

The Use of Theoretical Capacity Results in an Unrealistically Low