Concepts

Measures the denominator level in terms of what a

plant can supply

Is based on producing at full efficiency all the time

Represents the expected level of capacity utilization

for the next budget period

d$.$ Master$-$budget capacity utilization

Measures the denominator level in terms of demand

$4.$ for the output of the plant

Takes into account seasonal, cyclical, and trend

$5.$ factors

Should be used for performance evaluation in the

$6.$ current year

$7.$ Represents an ideal benchmark

$8.$ Highlights the cost of capacity acquired but not used

$9.$ Should be used for long$-$term pricing purposes

$10.$ Hides the cost of capacity acquired but not used

If used as the denominator$-$level concept, would avoid the restatement of unit costs when expected

$11.$ demand levels change