Capacity costs:
A)are difficult to estimate
B)don't provide a useful planning tool for nonmanufacturing firms
C)cannot be used with activity-based costing
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

Capacity costs are difficult to estimate because they are costs associated with maintaining and utilizing resources that are not directly tied to a specific product or activity. They represent the fixed costs of a business and can be influenced by a variety of factors such as changes in demand, technology, or the economy.

Answer: D 
 The other options are incorrect. Capacity costs can be a useful planning tool for nonmanufacturing firms, depending on the nature of their business and operations. Additionally, capacity costs can be used with activity-based costing, which is a method of allocating costs to specific activities based on their consumption of resources. However, they are still difficult to estimate, regardless of the costing method used.

Capacity Costs