I Just have a confusion regarding the Excess capacity , in Excess there is now opportunity cost. according to transfer price , and this is a correct not false
Which of the following statements regarding capacity management is false?
| | A. | Excess capacity results in no opportunity cost. | | Answer (A) is correct.
Excess capacity has a cost. Having excess capacity means that a company will either have to charge higher prices for its products or report lower income on its financial statements. | | B. | Capacity planning is part of the capital budgeting process. | | C. | Capacity planning is an element of strategic planning. | | D. | Producing at full capacity can incur additional opportunity costs. | |