b) Suppose that the factory of Paulo, Co. is able to produce 35,000 units of a product in a given quarter of the year, without considering unavoidable interruptions in activity. Also suppose that the quarterly company budget sets sales at 12,000 units. Then, the quantities of 35,000 and 12,000 units are respectively known as: Practical capacity and master-budget capacity Theoretical capacity and practical capacity Reassessment Management Accounting - Master in Management Section 4 Theoretical capacity and master-budget capacity Practical capacity and theoretical capacity lob costing (IE) is distinct from activity-based costing (ABC) because ABC requires that managers accumulate costs based on budgeted amounts, while ]C accumulates costs based on actual amounts C always generates less accurate cost estimates than ABC ABC requires that managers think of activities as the fundamental cost objects None of the above Custom er profitability analysis Supports the identication ofthose customers that mostly affect the company's operating income Requires customer-level data on both manufacturing and nonmanufacturing costs Allows managers to rank customers based on their relative contribution to operating income All of the above The process of cost allocation: Consists in the allocation of indirect costs to cost objects Consists in the identification of the relevant costs of cost objects Consists in the tracing of direct costs to cost objects All ofthe above Suppose that at Comp any A, 75% of total costs are indirect costs, whereas at Company B, 7 5% of total costs are direct costs. Then Introducing ABC is equally likely to be valuable to both companies Introducing ABC is unlikely to be valuable to either company Introducing ABC is more likely to be valuable at Company B than at Company A Introducing ABC is more likely to be valuable at Company A than at Company B Correctly allocating support department costs to operating departments Improves the estimate ofthe resources consumed by operating departments Is a typical example of activity-based costing Is an activity that is too costly given its benets Improves the estimate of total indirect costs