From a purely cost point of view, is capacity utilization less than 100% desirable or not desirable?
A)This depends on the capital structure
B)Neither of these, because it is neutral
C)Desirable, because it decreases unit costs
D)Not desirable, because in theory it raises unit costs

Question

Quizplus · Accepted Answer

Capacity utilization less than 100% is not desirable from a cost perspective because it means that fixed costs are spread over fewer units, potentially increasing the unit cost.

From a Purely Cost Point of View, Is Capacity Utilization