Rogger Septrya

2440011362
1. Theoretical capacity.
2. Practical capacity.
3. Expected actual capacity.
4. Normal capacity.
Explain about them and give an example for each of them.

Answer :
1. Theoretical capacity is the level of production a manufacturer would achieve if all
equipment and operations were carried out continuously at their optimum efficiency
which is often the case based on machines, people and space. Theoretical capacity is also
referred to as ideal capacity.
2. Practical capacity is a manufacturer's level of output often expressed in machine hours,
barrels, pounds which is less than the theoretical capacity or ideally if the theoretical
capacity is 2,080 hours based on 8 hours per day for 5 days per week for 52 weeks, the
practical capacity may be only 1,860 hours.
3. Expected actual capacity is the short-run rate on demand, minimizing under- or over-
applied overhead but not providing a consistent basis for assigning overhead costs.
Overhead per unit will fluctuate due to short-run changes in the expected level of output
which is also called planned capacity.
4. Normal capacity is the amount of production volume that is reasonably expected over
the long term to account for downtime associated with periodic maintenance activities,
crew problems, etc. and when budgeting for achievable production quantities, normal
capacity should be used, rather than theoretical capacity levels, because the possibility of
reaching normal capacity is quite high.