Question

Normal Capacity is the level of production that provides complete utilization of all facilities and personnel, but allows for some idle capacity due to operating interruptions, such as machinery breakdowns, idle time, and other inescapable inefficiencies.

Answer 1

Given statement is incorrect because it is practical capacity.

Normal capacity is the level of production that is used by most firms for budget development because it represents a logical balance between maximum production capacity and the capacity demanded by actual sales volume.

Whereas practical capacity is the level of production that provides complete utilization of all facilities and personnel, but allows for some idle capacity due to operating interruptions, such as machinery breakdowns, idle time, and other inescapable inefficiencies.

So on the basis of above explanation it is clear that as per information of the question that was practical capacity not normal capacity.