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w WRC manufactures inflatable pool loungers in its 25,000 square foot plant in Aldergrove . The production manager provi des you with the following information
wWRC manufactures inflatable pool loungersin its 25,000 square foot plant in Aldergrove. The production manager provides you with the following information as it relates to the various ways capacity levels of the production plant can be measured. To satisfy annual demand for 2022 the vice-president of production plans to produce 18,000 loungers. However, the marketing manager has identified that the demand between 2019 and 2021 has averaged 20,000 loungers per year. WRCs manufacturing plant has the capacity to produce 30,000 loungers annually assuming the plant is operating 365 days of the year. However, taking into consideration usual closures for such situations as weekends, holidays, and sick time, it is more likely the plant could produce 24,000 loungers annually.
i. Which of the capacity levels described in the previous paragraph would be used to determine the cost of idlecapacity? What is this level of capacity called?
ii. Which of the capacity levels described in the previous paragraph would be used for external reporting purposes? What is this level of capacity called?
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