Question : Objective 9.5 1) Practical capacity the denominator-level concept that ________. A) reduces : 1212179

Objective 9.5

1) Practical capacity is the denominator-level concept that ________.

A) reduces theoretical capacity for unavoidable operating interruptions

B) is the maximum level of operations at maximum efficiency

C) is based on the level of capacity utilization that satisfies average customer demand over periods generally longer than one year

D) is based on anticipated levels of capacity utilization for the coming budget period

2) ________ reduces theoretical capacity for unavoidable operating interruptions.

A) Practical capacity

B) Theoretical capacity

C) Master-budget capacity utilization

D) Normal capacity utilization

3) ________ is based on the level of capacity utilization that satisfies average customer demand over periods generally longer than one year.

A) Practical capacity

B) Theoretical capacity

C) Master-budget capacity utilization

D) Normal capacity utilization

4) ________ is the level of capacity utilization that managers expect for the current budget period, which is typically one year.

A) Practical capacity

B) Master-budget capacity utilization

C) Theoretical capacity

D) Normal capacity utilization

5) ________ is the level of capacity based on producing at full efficiency all the time.

A) Practical capacity

B) Theoretical capacity

C) Normal capacity

D) Demand capacity

6) Which of the following measures capacity levels in terms of demand for the output of the plant?

A) practical capacity and theoretical capacity

B) theoretical capacity and normal capacity utilization

C) normal capacity utilization and master-budget capacity utilization

D) master-budget capacity utilization and practical capacity

7) Which of the following best describes practical capacity?

A) It is the level of capacity that reduces theoretical capacity by considering unavoidable operating interruptions, such as scheduled maintenance time and shutdowns for holidays.

B) It is the level of capacity based on producing at full efficiency all the time.

C) It is the level of capacity utilization that satisfies average customer demand over a period that includes seasonal, cyclical, and trend factors.

D) It is the level of capacity utilization that managers expect for the current budget period, which is typically one year.

8) The budgeted fixed manufacturing cost rate is the lowest for ________.

A) practical capacity

B) theoretical capacity

C) master-budget capacity utilization

D) normal capacity utilization

9) ________ provides the lowest estimate of denominator-level capacity in case demand of the product is not a limiting factor.

A) Practical capacity

B) Theoretical capacity

C) Master-budget capacity utilization

D) Normal capacity utilization

Answer the following questions using the information below:

Henry Inc., a manufacturing firm, is able to produce 1,000 pairs of sneakers per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units per hour. The plant actually operates only 27 days per month. Based on the current budget, Henry estimates that it will be able to sell only 500,000 units due to the entry of a competitor with aggressive marketing capabilities. But the demand is unlikely to be affected in future and will be around 515,000. Assume the month has 30 days.

10) What is the master-budget capacity utilization level for this budget period?

A) 500,000 units

B) 515,000 units

C) 518,400 units

D) 720,000 units