(CMA)Practical capacity as a plant capacity concept:
A)Assumes all personnel and equipment will operate at peak efficiency and total plant capacity will be utilized
B)Does not consider idle time caused by inadequate sales demand
C)Includes consideration of idle time caused by both limited sales orders and human and equipment inefficiencies
D)Is the production volume that is necessary to meet sales demand for the next year

Question

Quizplus · Accepted Answer

Practical capacity takes into account both limited sales orders and human and equipment inefficiencies, including idle time. It assumes that production will be planned based on realistic expectations of sales demand and that the plant will utilize its available resources as best as possible. It does not assume that all personnel and equipment will operate at peak efficiency or that total plant capacity will be utilized. It is not necessarily the production volume necessary to meet sales demand for the next year, as sales demand can fluctuate and production plans may need to be adjusted accordingly.

(CMA)Practical Capacity as a Plant Capacity Concept