DEFINITION of Activity Capacity
Activity capacity refers to an activity's upper threshold of performance based on historical results and future expectations. Activity capacity involves a specified set of resources and an extended period of time, taking place under normal or expected operating conditions. Essentially, it is the amount of work or activity that can be completed within a particular amount of time given a certain amount of resources.
BREAKING DOWN Activity Capacity
Activity capacity measures an activity's anticipated performance, taking into consideration such variables as the availability of space, machinery, labor and materials. Activity capacity can be measured in terms of dollars, labor hours, weight, size or any other unit of measure in which an activity is performed.
Example of Activity Capacity
An example could be the rate of output for a machining activity measured in terms of cycles per hour.