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Stage 4 · How much can we make?

CAS-2: Capacity Determination

The sewing machines can do 3,000 a month, the press only 2,500, and last year a flood stopped everything. How much can Selvi’s unit really make?

What you will learn in CAS-2

  • Installed capacity and bottlenecks (§§4.3, 4.6, 5.1, 5.2)
  • Practical and normal capacity (§§4.1, 4.8, 5.3, 5.5)
  • Utilisation, idle and excess capacity (§§4.2, 4.4, 4.5, 6)
  • Disclosures (§7)

Chapters

  1. How many uniforms could we make? · Find the slowest step: it decides the whole line (§§4.3, 4.6, 5.1, 5.2, 5.4)
  2. A normal month · Leave the flood year out and find the usual output (§§4.1, 4.8, 5.3, 5.5)
  3. Used, idle or excess · How much of the unit did Selvi use this month? (§§4.2, 4.4, 4.5, 4.7, 6, 7)
  4. Spot the mistakes in the capacity note for the bank · Find them before the bank does (§§5.2, 5.5, 6.2)

Key terms

  • Installed capacity and bottleneck (§§4.3, 4.6, 5.1, 5.2, 5.4): Installed capacity: the most the unit can make, by the maker’s figures or a technical study. Bottleneck: a step where work piles up and holds back the whole line. If a machine is added, removed or changed, work it out again from that date.
  • Practical and normal capacity (§§4.1, 4.8, 5.3, 5.5): Practical capacity: installed capacity less the stoppages you can expect and cannot avoid (servicing, holidays, changeovers). Normal capacity: what is reached on average over several periods in normal conditions.
  • Utilisation, idle and excess capacity (§§4.2, 4.4, 4.5, 4.7, 6, 7): Utilisation: actual output as a % of installed capacity. Idle capacity: how far actual falls short of installed. Excess utilisation: how far it goes above. Say how you worked it out, what changed, why use was low and what that cost.

Common questions

What changed in CAS-2 (Revised 2024)?

The 2024 revision, effective for periods on or after 1 April 2024, defines eight terms including licensed capacity, idle capacity and excess capacity utilisation, and presents utilisation as a percentage of installed capacity.

How is normal capacity calculated?

On actual or expected capacity over time; an average of three to five normal years may be used, excluding abnormal periods (para 5.5).

CAS-2 (Revised 2024), Capacity Determination. Checked against the standard in November 2026. Selvi Garments, the school order and every figure in this lesson are fictional. Read the official text on the ICMAI Cost Accounting Standards page ↗ before applying it to real work.