The difference between practical capacity and theoretical capacity is
A) Budgeted fixed costs
B) Expected downtimes
C) Excess capacity
D) Nothing, because the two terms have the same meaning

Question

Quizplus · Accepted Answer

Practical capacity is the maximum possible level of output that a firm can sustain over a period of time, given its equipment, labor force, and technology, while theoretical capacity is the absolute maximum output that a firm can produce, assuming perfect conditions without any downtime. Therefore, the difference between practical and theoretical capacity is expected downtime, which reduces practical capacity.

The Difference Between Practical Capacity and Theoretical Capacity Is