Final answer:
If not all activity capacity is used, it is called unused capacity. It represents the available production capability that is not being fully exploited at a point in time. The correct option is c.
Step-by-step explanation:
If all the activity capacity is not used, this scenario is referred to as unused capacity. Capacity can be described in terms like practical capacity, activity capacity, unused capacity, or ideal capacity.
Unused capacity represents the portion of the production capability that is not being utilized to its fullest extent. Whereas practical capacity represents the amount of production achievable under normal, realistic conditions; and ideal capacity is the maximum output achievable under perfect conditions without any downtime.
In the context of business efficiency and cost management, understanding capacity and how it relates to actual production is vital. The goal for many operations is to minimize unused capacity, thus maximizing efficiency and profitability.
Definition 11.2.1 states that a capacity factor is the ratio of actual performance over time to the peak possible performance—or average output divided by maximum output, expressed as a percentage. This ratio is crucial in determining the extent of unused capacity. The correct option is c.