Author Question: Using master-budget capacity to allocate budgeted fixed manufacturing costs can result in a (Read 127 times)

lilldybug07 · **on:** Mar 6, 2021

Question 1

Using ________ as the denominator level also gives the manager a more accurate idea of the resources needed and used to produce a unit by excluding the cost of unused capacity.
◦ practical capacity
◦ normal capacity utilization
◦ theoretical capacity
◦ master-budget capacity utilization

Question 2

Using master-budget capacity to allocate budgeted fixed manufacturing costs can result in a
◦ stable measure; avoiding the recalculation of unit costs when expected demand levels change
◦ fixed costs spread over available capacity
◦ can result in a downward demand spiral
◦ in fixed overhead costs calculated based on capacity available

Viet Thy · **Reply #1 on:** Mar 6, 2021

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