Which of the following is an advantage of using practical capacity to allocate costs?
A) is that it allows a downward supply spiral to develop
B) is that it focuses management's attention on managing unused capacity
C) is that budgets are much easier to develop
D) is that it results in departments bearing a lower percentage of fixed costs

Question

Quizplus · Accepted Answer

Practically capacity is the measure of what can realistically be produced given the current operations and resources of a company. Allocating costs based on practical capacity encourages management to focus on utilizing unused capacity effectively. This can lead to improved efficiency and cost savings. The other options are not advantages of using practical capacity.

Which of the Following Is an Advantage of Using Practical