Which of the following is true of normal capacity utilization?
A) It will almost always show results that are very close to that of practical capacity utilization
B) It can result in setting selling prices that are not competitive.
C) It results in the lowest cost estimate of the four capacity options when used for product costing.
D) It is also called master-budget capacity utilization

Question

Quizplus · Accepted Answer

Normal capacity utilization accounts for variations in production levels, which can lead to higher costs per unit if not managed efficiently. This, in turn, might result in setting higher selling prices to cover costs, potentially making the prices less competitive in the market.

Which of the Following Is True of Normal Capacity Utilization