COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Choosing the appropriate level of capacity:
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is a key strategic decision
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may lead to loss of sales if overestimated
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may lead to idle capacity if underestimated
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All of these answers are correct.
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Explanation:
Detailed explanation-1: -Strategic capacity planning is essential as it helps the organization in meeting the future requirements of the organization. Planning ensures that operating cost are maintained at a minimum possible level without affecting the quality.
Detailed explanation-2: -Capacity is usually a major determinant of initial cost. Typically, the greater the capacity of a productive unit, the greater its cost.
There is 1 question to complete.