Dictionary of Accounting Terms: ideal capacity
ideal capacity
largest volume of output possible if a facility maintained continuous operation at optimum efficiency, allowing for no losses of any kind, even those deemed normal or unavoidable; also called maximum capacity, theoretical capacity, or engineered capacity. Since it is impossible to obtain ideal capacity, unfavorable variances will result if it is used to apply fixed cost.
Dictionary of Business Terms: ideal capacity
ideal capacity
largest volume of output possible if a facility maintained continuous operation at optimum efficiency, allowing for no losses of any kind, even those deemed normal or unavoidable; also called maximum capacity. Since it is impossible to obtain ideal capacity, unfavorable variances will result if it is used to apply fixed cost.
