Respuesta :
Capacity utilization based on theoretical capacity would provide a better signal of the need for an additional machine.
Capacity utilization is the capacity of production or output by utilizing the available resources at a given time.
Theoretical capacity is the capacity of producing output at a high level of efficiency with no downtime, which seems impossible in the real world because-
while manufacturing, many factors (shortage of labor, electricity down, climatic conditions, etc) are responsible for hindering the production process eventually leading to a lower efficiency level than theoretical capacity, which is also known as ideal capacity.
Therefore, to meet a higher level of production with their existing equipment and also provide a better signal for an additional machine's need, then the measure of capacity utilization will be theoretical capacity utilization.
To know more about capacity utilization, follow the below link:
https://brainly.com/question/19339910
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