Denominator volume refers to the total occurrences of the cost driver within an activity. The availability of each activity's capacity can be expressed in several ways. Which of the following ways would be considered inappropriate?
A) Absurd capacity
B) Normal capacity
C) Practical capacity
D) Theoretical capacity

Question

Quizplus · Accepted Answer

Choices B, C, and D all represent real ways that the denominator value can be expressed. Choice B is the quantity needed to satisfy the average customer demand over a period of time. Choice C reduces theoretical capacity by considering unavoidable interruptions. Choice D assumes no downtime and is considered unrealistic. Choice A is not a choice found within this text and is therefore the correct response as it would be an inappropriate selection.

Denominator Volume Refers to the Total Occurrences of the Cost